Getting a Low Interest Rate
Freezing the Rate
When you are promised a "rate lock" from your lender, it means that you are guaranteed to get a particular interest rate for a certain number of days while you work on the application process. This protects you from getting through your entire application process and discovering at the end that the interest rate has risen higher.
While there may be a choice of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lending institution will agree to freeze 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 with a rate lock of fewer days.
Other Ways to Save on Interest
In addition to choosing the shorter lock period, there are other ways you can score the best rate. The bigger down payment you pay, the better your rate will be, as you will be entering the loan with more equity. You could opt to pay points to reduce your interest rate for the loan term, meaning you pay more initially. For a lot of people, this makes sense and is a good deal..
At Trustin Mortgage, LLC, we answer questions about this process every day. Give us a call: (302) 765-8089.
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