What is a "rate lock period"?

In Georgia a "lock" means that if you have the intent to proceed with your mortgage application, you can get a guarantee to have your loan priced based on a specific day.  This gets your rate determined for a certain period of time during your mortgage process. A lock ensures that your interest rate cannot go up due to market changes while you are in the application process.

Rate lock periods vary in length, between 7 to 90 days.  The longer the lock, the higher the rate. You can get even longer lock periods, i.e. 90 days, but the rate may be almost prohibitive in cost.

What is a "float down"?

A float down is sometimes made available by lenders if rates seem variable and buyers are stressing about whether or not to lock.  Float downs typically are not offered on locks shorter than 45 days.  And, typically, they are relocked on the current 30 day pricing, assuming it is better than the rate offered in your initial lock.

Additional Ways to Save on Interest

There are other ways to get a reduced rate, besides opting for a shorter rate lock period. A larger down payment, a higher credit score, more home equity and a larger loan size all impact your final interest rate.  You could also opt to pay points to improve your interest rate for the loan term, meaning you pay more initially.  This option works for many people so long as the upfront payment is deducted on the taxes and proper calculations have been made for recouping the spent funds .  Talk to your tax professional about this option before making a final decision.

“Educating is the best method for retaining a client for life.” 
Have Questions?  Call Elizabeth at  678-467-2330.

 

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