Getting a Low Interest Rate
Lock It In
When you are offered a "rate lock" from your lender, it means that you are guaranteed to keep a particular interest rate for a certain number of days for your application process. This saves you from getting through your entire application process and discovering at the end that the interest rate has gone up.
Rate lock periods can vary in length, between 15 to 60 days, with the longer period generally costing more. The lending institution will agree to hold an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
More Ways to Save on Interest
There are other ways to get a better rate, in addition to opting for a shorter rate lock period. A bigger down payment will get you a better interest rate, since you will be starting out with more equity. You could opt to pay points to lower your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You are paying more up front, but you will come out ahead, especially if you don't refinance early.
At Franklin Mortgage Corp, we answer questions about this process every day. Call us at 401-886-4261.