Getting a Low Interest Rate
Lock It In
When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a specific interest rate over a determined period for your application process. This keeps you from going through your entire application process and learning at the end that the interest rate has gone up.
Although there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. The lending institution may agree to lock in an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
Other Interest Saving Strategies
There are more ways to get a low rate, in addition to opting for a shorter rate lock period. A larger down payment will give you a better interest rate, since you are starting out with a good deal of equity. You could opt to pay points to reduce your rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to improve the interest rate over the term of the loan. You are paying more initially, but you will save money, especially if you keep the loan for the full term.
At Savers Home Loans, we answer questions about this process every day. Give us a call at (800) 974-0509.