"Rate Lock" and other Ways to Get a Lower Interest Rate
Lock It In
When you are promised a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate over a certain number of days for the application process. This protects you from working through your whole application process and discovering at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, between 15 to 60 days, with the longer period usually costing more. The lender can agree to freeze an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are other ways to get a reduced rate, in addition to going with a shorter rate lock period. The larger down payment you make, the lower the interest rate will be, since you will have more equity from the start. You can pay points to improve your interest rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You pay more initially, but you'll come out ahead, especially if you keep the loan for a long time.
Equity Edge Mortgage, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call at 719-425-2226.