"Rate Lock" and other Ways to Get a Lower Interest Rate
Lock It In
When you are promised a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate over a certain number of days for the application process. This keeps you from working through your whole application process and finding out at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans generally costing more. A lender can agree to hold an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
Additional Ways to Save on Interest
In addition to going with the shorter rate lock period, there are other ways you may be able to get the best rate. A larger down payment will give you a better interest rate, because you're starting out with more equity. You can pay points to bring down your rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the interest rate over the life of the loan. You'll pay more initially, but you'll come out ahead, especially if you don't refinance early.
Ward Kilduff Mortgage can answer questions about rate lock periods & many others. Call us at (860) 658-7100.
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