"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to hold a certain interest rate and a particular number of points for you for a certain period during your application process. This protects you from going through your whole application process and discovering at the end that the interest rate has risen higher.
Although there might be a choice of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. A lending institution may agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to going with the shorter rate lock period, there are more ways you can attain the best rate. A bigger down payment will give you a lower interest rate, since you're starting out with more equity. You could opt to pay points to reduce your rate for the loan term, meaning you pay more initially. To many people, this makes sense and is a good deal..
Savers Home Loans can walk you through the pitfalls of getting a mortgage. Give us a call: (800) 974-0509.