Getting a Low Interest Rate
Locking in your Interest Rate
When you're offered a "rate lock" from the lender, it means that you are guaranteed to keep a specific interest rate over a determined period while you work on your application process. This ensures that your interest rate can't go up during the application process.
Although there may be a choice of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. The lending institution will agree to lock in an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.
Other Ways to Save on Interest
There are more ways to get a reduced rate, in addition to going with a shorter rate lock period. The larger down payment you make, the better the interest rate will be, as you will be entering the loan with more equity. You may opt to pay points to improve your rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to reduce the rate over the term of the loan. You'll pay more initially, but you will save money, especially if you keep the loan for the full term.
At New Millennium Mortgage Co. NMLS: 331173, we answer questions about this process every day. Give us a call at (941) 366-5800.
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