Getting a Low Interest Rate
What is a Rate Lock?
When you're offered a "rate lock" from the lender, it means that you are guaranteed to keep a particular interest rate over a determined period while you work on your application process. This prevents you from going through your entire application process and finding out at the end that your interest rate has gone up.
Although there can be a choice of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. You can get a longer period for your lock, but in doing so, will likely have a higher rate than you would have with a shorter period
Other Interest Saving Strategies
In addition to going with the shorter rate lock period, there are other ways you are able to score the lowest rate. A larger down payment will result in a reduced interest rate, because you will have more equity at the start. You could choose to pay points to improve your rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You pay more up front, but you'll save money, especially if you keep the loan for the full term.
At Ward Kilduff Mortgage, we answer questions about this process every day. Call us at (860) 658-7100.
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