Getting a Low Interest Rate
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Lock It In
When you're promised a "rate lock" from the lender, it means that you are guaranteed to keep a specific interest rate for a certain number of days for your application process. This keeps you from going through your whole application process and finding out at the end that the interest rate has gone up.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer ones usually costing more. A lender may agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
Additional Ways to Save on Interest
In addition to choosing the shorter rate lock period, there are other ways you can attain the lowest rate. A larger down payment will result in a better interest rate, since you will have more equity at the start. You can pay points to improve your interest rate for the life of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the term of the loan. You pay more initially, but you will come out ahead, especially if you keep the loan for the full term.
Mortgage Headquarters of Missouri, Inc can walk you through the pitfalls of getting a mortgage. Give us a call at (573) 302-9990.