"Rate Lock" and other Ways to Get a Lower Interest Rate
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What is a Rate Lock?
When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a specific interest rate for a determined period for the application process. This ensures that your interest rate can't go up during the application process.
Although there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. A 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 more than that of a rate lock of a shorter period.
Other Interest Saving Strategies
In addition to opting for a shorter lock period, there are several ways you may be able to get the lowest rate. A bigger down payment will result in a better interest rate, because you will be starting out with a good deal of equity. You may choose to pay points to lower your interest rate over the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You are paying more up front, but you will save money, especially if you keep the loan for the full term.
Blue Sky Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 970/476.0602.