Getting a Low Interest Rate
What is a Rate Lock?
When you are promised a "rate lock" from your lender, it means that you are guaranteed to keep a particular interest rate over a determined period while you work on the application process. This means your interest rate cannot rise during the application process.
Although there may be a choice of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. A lender can agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
Other Interest Saving Strategies
In addition to choosing a shorter lock period, there are several ways you can attain the lowest rate. A larger down payment will give you a lower interest rate, since you will have more equity at the start. You may choose to pay points to improve your rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You will pay more up front, but you will come out ahead, especially if you don't refinance early.
Coastal Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Give us a call: 504-866-5626.
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