"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
When you're promised a "rate lock" from a lender, it means that you are guaranteed to get a particular interest rate for a certain number of days while you work on the application process. This prevents you from getting through your whole application process and finding out at the end that your interest rate has gotten higher.
While there might be a choice of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. The lender will agree to freeze an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
Additional Ways to Save on Interest
There are other ways to get a good rate, besides choosing a shorter rate lock period. A larger down payment will give you a lower interest rate, because you will be starting out with more equity. You can pay points to bring down your rate for the loan term, meaning you pay more initially. For a lot of people, this makes financial sense..
Carter Financial Solutions can walk you through the pitfalls of getting a mortgage. Call us at 866-840-8745 x2.