"Rate Lock" and other Ways to Get a Lower Interest Rate
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Locking in your Interest Rate
When you are promised a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate over a determined period while you work on the application process. This ensures that your interest rate will not get higher while you are going through the application process.
Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer spans typically costing more. A lender can agree to hold an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
More Ways to Save on Interest
In addition to choosing a shorter rate lock period, there are more ways you can get the lowest rate. The bigger down payment you make, the lower the interest rate will be, as you will be entering the loan with more equity. You may choose to pay points to improve your interest rate for the term of the loan, 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'll pay more initially, but you will come out ahead in the end.
At Mortgage Max Inc, we answer questions about this process every day. Call us: (760) 547-2080.