Getting a Low Interest Rate
What is a Rate Lock?
When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a particular interest rate over a determined period for your application process. This ensures that your interest rate won't get higher while you are working through the application process.
Rate lock periods can vary in length, between 15 to 60 days, with the longer period usually costing more. The lending institution will agree to hold an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to choosing the shorter lock period, there are more ways you may be able to score the lowest rate. The bigger down payment you can pay, the better your interest rate will be, as you will have more equity from the beginning. You can pay points to bring down your 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 initially, but you'll come out ahead, especially if you keep the loan for the full term.
F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org) can answer questions about rate lock periods and many others. Call us at 214-300-8756.