Getting a Low Interest Rate
Freezing the Rate
When you're offered a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate for a determined period while you work on your application process. This means your interest rate can't grow while you are going through the application process.
Rate lock periods can vary in length, between 15 to 60 days, with the longer spans generally costing more. The lending institution may agree to hold an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
Additional Ways to Save on Interest
There are more ways to get a reduced rate, in addition to agreeing to a shorter rate lock period. The more the down payment, the smaller your interest rate will be, as you will have more equity from the start. You can pay points to improve your rate for the term of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to reduce the rate over the term of the loan. You pay more up front, but you'll come out ahead in the long run.
Affinity Mortgage Brokers can walk you through the pitfalls of getting a mortgage. Call us: 719-425-2226.