"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
When you are offered a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate over a determined period while you work on your application process. This keeps you from going through your entire application process and finding out at the end that your interest rate has risen higher.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer period typically costing more. The lending institution can agree to freeze an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
Other Interest Saving Strategies
In addition to going with a shorter rate lock period, there are other ways you may be able to score the best rate. A bigger down payment will give you a better interest rate, since you will have more equity from the beginning. You can pay points to improve your interest rate for the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you will come out ahead, especially if you keep the loan for the full term.
At Executive Lending Group, LLC, we answer questions about this process every day. Call us at (816) 525-8000 & (81.
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