5 Key Insights About the Interest-Rate Lock
Real estate jargon can be a bit of a challenge. But understanding key terms (especially mortgage-related ones) may be the secret to making effective, smart home buying decisions.
So, in an effort to make the process a little less confusing, we thought we'd clear up a few vocabulary words, starting with a few insights on the "interest-rate lock".
1. An interest-rate lock allows you to essentially freeze your mortgage rate at a set percentage for a set period of time.
2. Because mortgage rates can fluctuate often, this interest-rate lock gives you time to shop around for your home once you have been prequalified for a loan...without fearing of rising rates or a hike in your potential monthly mortgage costs.
3. Rate locks typically last for periods of 10, 15, 30, 45 or 60 days (though some mortgage lenders offer “extended” lock programs).
4. Typically, the longer a lock period is, the higher the rate will be.
5. Warning: Should mortgage rates fall during your lock period, you will still be locked-in to that original higher rate! We recommend studying up on the market before locking yourself in.