Getting a Low Interest Rate
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Locking in your Interest Rate
When you're promised a "rate lock" from your lender, it means that you are guaranteed to keep a particular interest rate over a certain number of days while you work on the application process. This prevents you from getting through your entire application process and learning at the end that your interest rate has risen higher.
Although there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lending institution may agree to freeze an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher 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 several ways you can get the lowest rate. A bigger down payment will result in a lower interest rate, because you're starting out with more equity. You can pay points to reduce your interest rate over the life of the loan, meaning you pay more up front. For a lot of people, this makes sense and is a good deal.