"Rate Lock" and other Ways to Get a Lower Interest Rate
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Locking It In
When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a particular interest rate for a determined period while you work on your application process. This saves you from working through your whole application process and learning at the end that your interest rate has risen higher.
Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer ones generally costing more. A lender will agree to freeze an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
In addition to opting for the shorter lock period, there are other ways you can attain the lowest rate. A bigger down payment will give you a lower interest rate, because you'll have a good deal of equity at the start. You might choose to pay points to lower your rate over the life of the loan, meaning you pay more initially. 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'll save money in the end.
At Metro Mortgage, we answer questions about this process every day. Give us a call: 800-252-6633.