"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
When you're offered a "rate lock" from a lender, it means that you are guaranteed to get a set interest rate over a determined period while you work on the application process. This protects you from getting through your whole application process and finding out at the end that your interest rate has gone up.
While there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. A lender may agree to lock in an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Other Interest Saving Strategies
There are more ways to get a lower rate, besides opting for a shorter rate lock period. The bigger down payment you can pay, the lower your rate will be, as you will have more equity from the start. You can pay points to bring down your interest rate over the life of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to improve the rate over the life of the loan. You'll pay more initially, but you will save money, especially if you don't refinance early.
At Financial Edge Mortgage Corp., we answer questions about this process every day. Give us a call: 425-508-9988.
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