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

What is a Rate Lock?

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 the application process. This protects you from working through your entire application process and finding out at the end that your interest rate has risen higher.

Although there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lending institution may agree to freeze an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

Other Interest Saving Strategies

In addition to choosing the shorter rate lock period, there are more ways you may be able to attain the lowest rate. The more the down payment, the better your rate will be, since you will have more equity from the beginning. You could choose to pay points to lower your interest rate over the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the term of the loan. You pay more up front, but you will save money, especially if you don't refinance early.

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