When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a set interest rate over a certain number of days for the application process. This prevents you from getting through your whole application process and learning at the end that your interest rate has risen higher.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer ones generally costing more. A lender will agree to freeze an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
There are other ways to get a good rate, besides agreeing to a shorter rate lock period. The larger down payment you make, the lower the interest rate will be, since you will be entering the loan with more equity. You might opt to pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You will pay more up front, but you will save money in the long run.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.