Getting a Low Interest Rate
Locking It In
When you are offered a "rate lock" from your lender, it means that you are guaranteed to keep a particular interest rate over a certain number of days for the application process. This ensures that your interest rate won't rise during the application process.
Although there may 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 doing so, will likely have a higher rate than you would with a shorter rate lock period
Other Interest Saving Strategies
There are other ways to get a better rate, in addition to agreeing to a shorter rate lock period. The larger down payment you make, the smaller your interest rate will be, because you will be entering the loan with more equity. You can pay points to bring down your interest rate for the life of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the life of the loan. You'll pay more up front, but you will come out ahead in the long run.
At Contemporary Mortgage Services, Inc, we answer questions about this process every day. Call us: 407-834-3377.
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