"Rate Lock" and other Ways to Get a Lower Interest Rate
Freezing the Rate
When you're offered a "rate lock" from the lender, it means that you are guaranteed to keep a particular interest rate for a certain number of days for your application process. This protects you from getting through your whole application process and discovering at the end that the interest rate has gotten higher.
While there are several lengths of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. The lending institution will agree to hold an interest rate and points for a longer period, such as sixty 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 other ways to get a lower rate, in addition to agreeing to a shorter rate lock period. The bigger down payment you can pay, the lower your interest rate will be, because you will have more equity from the beginning. You could opt to pay points to improve your interest rate for the term of the loan, meaning you pay more initially. For many people, this makes financial sense..
Saab Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 703-288-0777.
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