What is a "rate lock period"?

Freezing the Rate

When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a specific interest rate over a determined period while you work on the application process. This keeps you from working through your whole application process and discovering at the end that the interest rate has gotten higher.

Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer ones typically costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher interest rate than you would have with a shorter span of time

More Ways to Save on Interest

In addition to choosing the shorter rate lock period, there are other ways you may be able to get the best rate. A bigger down payment will get you a better interest rate, because you'll have more equity at the start. You can pay points to improve your interest rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you'll save money in the long run.

AmeriBest Mortgage can answer questions about rate lock periods and many others. Give us a call: (321) 777-7277.

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