Getting a Low Interest Rate
Freezing the Rate
When you are promised a "rate lock" from a lender, it means that you are guaranteed to keep a specific interest rate over a determined period for the application process. This ensures that your interest rate will not get higher during the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer ones generally costing more. You can get a longer period for your lock, but in choosing this option, will probably have a higher rate than you would have with a shorter rate lock span of time
Additional Ways to Save on Interest
In addition to choosing the shorter lock period, there are other ways you may be able to attain the best rate. The more the down payment, the smaller your interest rate will be, as you will be starting with more equity. You may choose to pay points to bring down your interest rate for the life of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to reduce the interest rate over the term of the loan. You pay more initially, but you will come out ahead in the long run.
Alternative Mortgage Group can answer questions about rate lock periods and many others. Call us at 561-395-4264.