"Rate Lock" and other Ways to Get a Lower Interest Rate
Freezing the Rate
When you're offered a "rate lock" from your lender, it means that you are guaranteed to get a specific interest rate over a determined period for your application process. This keeps you from working through your entire application process and finding out at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans usually costing more. The lender will agree to lock in 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 fewer days.
More Ways to Get a Great Interest Rate
In addition to opting for a shorter rate lock period, there are other ways you can attain the best rate. A bigger down payment will result in a reduced interest rate, since you are starting out with more equity. You could choose to pay points to improve your interest rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to improve the rate over the term of the loan. You'll pay more up front, but you'll come out ahead, especially if you don't refinance early.
Pioneer Mortgage Corp can walk you through the pitfalls of getting a mortgage. Give us a call at 781-245-4924.