What is a "rate lock period"?
Locking It In
A rate "lock" or "commitment" is a lender's promise to lock in a certain interest rate and a specific number of points for you for a specified period during your application process. This ensures that your interest rate can't grow while you are going through the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans usually costing more. A lending institution may agree to hold an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
There are more ways to get a lower rate, besides choosing a shorter rate lock period. The larger the down payment, the better your interest rate will be, as you will be entering the loan with more equity. You could choose to pay points to improve your interest rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to improve the rate over the life of the loan. You are paying more up front, but you'll save money, especially if you don't refinance early.
Diamond Mortgage, LLC can answer questions about rate lock periods & many others. Give us a call: 317-842-7744.