Getting a Low Interest Rate
Locking in your Interest Rate
When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a set interest rate over a certain number of days for your application process. This keeps you from working through your entire application process and discovering at the end that your interest rate has gotten higher.
Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer spans usually costing more. The lender may 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 that of a rate lock of a shorter period.
Other Ways to Save on Interest
In addition to going with a shorter lock period, there are more ways you can get the lowest rate. The larger down payment you can make, the smaller your rate will be, because you will have more equity from the beginning. You may opt 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 some is to pay points to reduce the rate over the life of the loan. You pay more initially, but you'll come out ahead, especially if you don't refinance early.
Washingtonian Mortgage, LLC can walk you through the pitfalls of getting a mortgage. Call us at 410-451-2755.