"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
When you're offered a "rate lock" from a lender, it means that you are guaranteed to keep a set interest rate over a determined period for the application process. This means your interest rate can't go up during the application process.
Although there are several lengths of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. A lending institution may agree to lock in an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to opting for a shorter lock period, there are more ways you can score the lowest rate. A larger down payment will get you a lower interest rate, because you will have more equity at the start. You could opt to pay points to improve your interest rate over 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 reduce the interest rate over the life of the loan. You'll pay more up front, but you'll come out ahead in the end.
Coastal Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Call us at 504-866-5626.
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