What is a "rate lock period"? How can you make sure your rate is low?
A rate lock or a rate lock commitment (RLC) is our promise to hold a specific interest rate for a specified period of time while your application is processed. This ensures your protection against a suspected rising market. We receive specialized knowledge directly from "Wall Street" that alerts our staff of what economic data will be released for a specific week. Analyst directly advise our staff whether or not to "Float" an interest rate or "Lock" an interest rate. We automatically pass this inside knowledge directly to you. The "Bond-Market" is a major factor in mortgage interest rates. Typically, if the Bond Market is rallying, then the stock market isn't. Therefore, we would expect a decrease in mortgage interest rates. In retrospect, if the stock market is rallying, bonds typically don't. Therefore, we would expect a rise in mortgage interest rates. Economic data plays a huge role in stock and bond increases and decreases (loss and gains). You can trust our expert knowledge and advice, however the decision to "Lock" or "Float" your mortgage interest rate is entirely your decision to make.
A rate lock period can vary in length, and longer ones usually cost more. Rate locks start at 15 days and can go up to 120 days ("Constuction-to-Perm" rates have longer rate lock options). Since no analyst can accurately quote the market activity that will occur in the future, it is a higher risk for a lender to lock an interest rate too far in advance. In mortgages, rates are always adjusted by the risk. We will agree to "hold" your interest rate and points (if applicable) for a longer period, say 60 days, but in exchange the rate and points (if applicable) are higher than with a shorter rate lock period.
There are many ways besides opting for a shorter rate lock period to get a lower rate. A larger down payment will result in a lower interest rate than a smaller one, because you're starting out with more equity. You may opt to lower your rate by paying discount points, but that means you pay more up front. For many people, this makes sense and is a wise decision. Let us help you determine if discount points are right for your situation.
The interest rate you qualify for will depend on your type of mortgage term and amortization (ARM v/s Fixed) - (30 year, 25 year, 20 year, 15 year, etc...), type of mortgage approval, credit profile, your debt-to-income (DTI) ratio, and Loan-to-Value (LTV). If these items align correctly, you will qualify for a lower interest rate. Contact us today for more details and to inquire about what type of approval you would qualify for.
