What is a "rate lock period"?

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What is a Rate Lock?

When you are offered a "rate lock" from the lender, it means that you are guaranteed to keep a specific interest rate over a certain number of days while you work on the application process. This means your interest rate won't grow as you are working through the application process.

Although there might be a choice of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. A lending institution may 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 more than that of a rate lock of fewer days.

Other Interest Saving Strategies

There are more ways to get a low rate, in addition to going with a shorter rate lock period. A larger down payment will give you a better interest rate, since you'll have a good deal of equity at the start. You can pay points to reduce your interest rate for the life of the loan, meaning you pay more up front. To many people, this makes financial sense..

Bluff City Mortgage, Inc can answer questions about rate lock periods and many others. Give us a call: (901) 861-8022.