What is a "rate lock period"?
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Locking It In
A rate "lock" or "commitment" is a lender's promise to lock in a particular interest rate and a specific number of points for you for a certain period while your application is processed. This protects you from going through your entire application process and discovering at the end that your interest rate has risen higher.
While there are several lengths of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. The lending institution will agree to lock in an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
Other Ways to Save on Interest
In addition to opting for a shorter rate lock period, there are other ways you may be able to attain the best rate. The more the down payment, the lower the rate will be, because you will be entering the loan with more equity. You may opt to pay points to lower your rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the rate over the life of the loan. You pay more up front, but you'll save money in the end.
Taurus Mortgage Corporation can walk you through the pitfalls of getting a mortgage. Call us at (877) 682-8787.