"Rate Lock" and other Ways to Get a Lower Interest Rate
Lock It In
When you are promised a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate over a determined period for the application process. This keeps you from getting through your entire application process and discovering at the end that your interest rate has gotten higher.
Although there can be a choice of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. A lending institution may agree to freeze an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to choosing a shorter rate lock period, there are other ways you are able to attain the best rate. The more the down payment, the lower your interest rate will be, since you will be entering the loan with more equity. You can pay points to improve your rate for the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You will pay more initially, but you will come out ahead, especially if you don't refinance early.
Contemporary Mortgage Services, Inc can walk you through the pitfalls of getting a mortgage. Call us: 407-834-3377.
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