Since weeks, and sometimes months, can go by between having the offer accepted and closing on the new home, it’s a good idea to lock in the interest rate and points.
What is a rate lock?
A lock is a commitment by the lender that guarantees Home buyer a certain interest rate for a specific period of time.
Time period
The most common amount of time for a lock is 30 days. It is good to remember, though, that the shorter the lock period, typically the lower the rate will be. The longer the lock period, the greater the risk to the lender that rates will change, and not necessarily in the lender’s favor. That’s why lenders usually charge more for a longer time period with a lock.
Locking into rates and points means that the lender commits to giving buyer a specified interest rate for a specified period of time. If buyer don’t lock into rates and points, home buyer risk the mortgage costing more than it needs to, so be sure that home buyers are clear about what to lock into and for how long.
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