What is a "rate lock period"?
Locking in your Interest Rate
A rate "lock" or "commitment" is a promise from the lender to set a particular interest rate and a specific number of points for you for a certain period of time during your application process. This saves you from working through your entire application process and discovering at the end that your interest rate has risen higher.
Although there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. A lender may agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
Other Interest Saving Strategies
In addition to going with a shorter lock period, there are other ways you may be able to attain the lowest rate. A larger down payment will get you a lower interest rate, because you'll have a good deal of equity at the start. You can pay points to reduce your rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the term of the loan. You pay more initially, but you'll save money, especially if you keep the loan for a long time.
Diamond Mortgage, LLC can walk you through the pitfalls of getting a mortgage. Call us: 3178427744.