"Rate Lock" and other Ways to Get a Lower Interest Rate
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What is a Rate Lock?
When you're promised a "rate lock" from the lender, it means that you are guaranteed to keep a set interest rate for a certain number of days while you work on the application process. This means your interest rate will not grow as you are working through the application process.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones typically costing more. A lending institution may agree to hold an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are other ways to get a good rate, in addition to agreeing to a shorter rate lock period. A larger down payment will give you a reduced interest rate, because you will be starting out with more equity. You may choose to pay points to lower your interest rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to improve the interest rate over the life of the loan. You are paying more initially, but you will come out ahead, especially if you don't refinance early.
Blue Sky Funding, LLC can answer questions about rate lock periods & many others. Give us a call: 817-616-3651.