"Rate Lock" and other Ways to Get a Lower Interest Rate
Lock It In
When you are offered a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate for a certain number of days for the application process. This keeps you from getting through your entire 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 longer spans are generally more expensive. You can get a longer period for your lock, but in choosing this option, will most likely have a higher rate than you would have with a shorter rate lock span of time
Other Interest Saving Strategies
There are other ways to get a better rate, in addition to opting for a shorter rate lock period. The bigger down payment you make, the smaller your interest rate will be, as you will be entering the loan with more equity. You could choose to pay points to lower your interest rate for the life of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You are paying more initially, but you'll come out ahead in the end.
At Alternative Mortgage Group, we answer questions about this process every day. Give us a call: 561-395-4264.