Getting a Low Interest Rate

What is a Rate Lock?

When you're offered a "rate lock" from a lender, it means that you are guaranteed to get a specific interest rate over a certain number of days for your application process. This ensures that your interest rate won't rise during the application process.

While there might be a choice of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. A lender can agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Other Interest Saving Strategies

In addition to choosing the shorter rate lock period, there are other ways you can get the best rate. A larger down payment will get you a lower interest rate, since you'll have more equity from the beginning. 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 is a good option 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'll come out ahead, especially if you keep the loan for a long time.

Milestone Mortgage, Inc. NMLS#136714 can walk you through the pitfalls of getting a mortgage. Call us: 3175959600.

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Milestone Mortgage, Inc. NMLS#136714

7168 Graham Road Suite 175
Indianapolis, IN 46250-2683