Getting a Low Interest Rate
Locking It In
When you are promised a "rate lock" from your lender, it means that you are guaranteed to get a set interest rate for a certain number of days while you work on your application process. This ensures that your interest rate won't grow while you are working through the application process.
Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer spans typically costing more. A lending institution may agree to lock in an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
Other Interest Saving Strategies
There are other ways to get a lower rate, besides choosing a shorter rate lock period. A bigger down payment will get you a better interest rate, since you are starting out with a good deal of equity. You might opt to pay points to lower your rate over the life of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the term of the loan. You pay more initially, but you'll save money, especially if you don't refinance early.
At United Lending, we answer questions about this process every day. Give us a call: 512-592-5462.