"Rate Lock" and other Ways to Get a Lower Interest Rate
Freezing the Rate
When you are promised a "rate lock" from your lender, it means that you are guaranteed to keep a set interest rate over a determined period while you work on your application process. This keeps you from going through your entire application process and discovering at the end that your interest rate has gotten higher.
While there can be a choice of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. You can get a longer period for your lock, but in making this choice, will likely have a higher rate than you would have with a shorter rate lock period
More Ways to Get a Great Interest Rate
There are other ways to get a low rate, besides agreeing to a shorter rate lock period. The larger down payment you pay, the smaller your rate will be, as you will be starting with more equity. You might choose to pay points to bring down your interest rate over the term of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You pay more up front, but you will save money in the long run.
At Contemporary Mortgage Services, Inc, we answer questions about this process every day. Call us at 407-834-3377.
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