What is a "rate lock period"?

Locking in your Interest Rate

When you are promised a "rate lock" from a lender, it means that you are guaranteed to keep a set interest rate for a determined period while you work on your application process. This saves you from working through your entire application process and finding out at the end that the interest rate has gotten higher.

Although there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. A lending institution will agree to freeze an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be higher 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 more ways you can attain the best rate. A bigger down payment will result in a better interest rate, since you'll be starting out with a good deal of equity. You can pay points to bring down your rate over 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 rate over the life of the loan. You are paying more up front, but you'll save money, especially if you keep the loan for a long time.

Hawk Mortgage Group can answer questions about rate lock periods & many others. Call us at (443) 619-7900.

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