What is a "rate lock period"?
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Freezing the Rate
When you're promised a "rate lock" from your lender, it means that you are guaranteed to keep a set interest rate for a certain number of days for the application process. This prevents you from going through your entire application process and discovering at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer period usually costing more. A lending institution may agree to hold 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 with a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to choosing the shorter lock period, there are other ways you are able to score the lowest rate. The larger down payment you pay, the lower your rate will be, because you will have more equity from the beginning. You can pay points to reduce your interest rate over the loan term, meaning you pay more initially. For a lot of people, this makes financial sense..
Cal Fed Mortgage can answer questions about rate lock periods and many others. Give us a call at (310) 378-2858.