"Rate Lock" and other Ways to Get a Lower Interest Rate

Locking in your Interest Rate

When you're offered a "rate lock" from the lender, it means that you are guaranteed to get a set interest rate for a determined period while you work on the application process. This means your interest rate can't get higher while you are going through the application process.

Although there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. The lending institution can agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

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 lowest rate. The bigger down payment you can make, the smaller the rate will be, because you will be entering the loan with more equity. You might opt to pay points to improve your interest rate over the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to reduce the rate over the life of the loan. You'll pay more initially, but you will save money in the end.

At Executive Lending Group, LLC, we answer questions about this process every day. Give us a call: 8165258000.