"Rate Lock" and other Ways to Get a Lower Interest Rate
Freezing the Rate
When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a certain interest rate over a certain number of days for the application process. This prevents you from going through your entire application process and discovering at the end that your interest rate has gotten higher.
While there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. The lender will agree to lock in an interest rate and points for a longer period, like 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 more ways to get a reduced rate, in addition to agreeing to a shorter rate lock period. A larger down payment will result in a lower interest rate, since you will have more equity from the beginning. You can pay points to reduce your rate for the life of the loan, meaning you pay more initially. For a lot of people, this makes sense and is a good deal..
At Carter Financial Solutions, we answer questions about this process every day. Call us: 866-840-8745 x2.