Getting a Low Interest Rate
What is a Rate Lock?
When you are promised a "rate lock" from a lender, it means that you are guaranteed to get a set interest rate over a certain number of days while you work on your application process. This prevents you from going through your entire application process and learning at the end that the interest rate has gone up.
Although there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. You can get a longer period for your lock, but in doing so, will likely have a higher interest rate than you would with a shorter span of time
Other Interest Saving Strategies
In addition to choosing the shorter lock period, there are other ways you may be able to attain the best rate. A larger down payment will result in a better interest rate, because you'll be starting out with more equity. You may opt to pay points to reduce your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you will come out ahead, especially if you keep the loan for a long time.
At Ward Kilduff Mortgage, we answer questions about this process every day. Give us a call at (860) 658-7100.
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