When you're promised a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate for a certain number of days for your application process. This means your interest rate cannot get higher during the application process.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans generally costing more. A lending institution can agree to hold an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
There are other ways to get a good rate, in addition to opting for a shorter rate lock period. The larger down payment you can pay, the smaller the interest rate will be, as you will have more equity from the beginning. You can pay points to bring down your interest rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the rate over the term of the loan. You'll pay more up front, but you will save money, especially if you don't refinance early.
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.