"Rate Lock" and other Ways to Get a Lower Interest Rate
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What is a Rate Lock?
When you are offered a "rate lock" from the lender, it means that you are guaranteed to get a certain interest rate over a determined period while you work on the application process. This saves you from going through your entire application process and learning at the end that your interest rate has gotten higher.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer period typically costing more. You can get a longer period for your lock, but in choosing this option, will probably have a higher rate than you would have with a shorter rate lock span of time
More Ways to Get a Great Interest Rate
In addition to going with a shorter rate lock period, there are other ways you can get the lowest rate. A bigger down payment will give you a lower interest rate, since you will be starting out with a good deal of equity. You may choose to pay points to lower your rate over the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the rate over the term of the loan. You will pay more initially, but you will save money, especially if you don't refinance early.
At Bancmart Mortgage Network, Inc., we answer questions about this process every day. Give us a call: (773) 205-2323.