"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a specific interest rate over a certain number of days while you work on the application process. This means your interest rate will not grow while you are going through the application process.
While there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. The lending institution can agree to lock in an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
More Ways to Get a Great Interest Rate
There are other ways to get a lower rate, in addition to going with a shorter rate lock period. A larger down payment will get you a lower interest rate, since you will be starting out with a good deal of equity. You could choose to pay points to lower your interest rate for the life of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You pay more up front, but you'll save money in the end.
Saab Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 703-288-0777.
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