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

Locking It In

When you're promised a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate for a certain number of days while you work on the application process. This prevents you from going through your entire application process and finding out at the end that the interest rate has gotten higher.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer spans generally costing more. The lender can agree to lock in 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 that of a rate lock of fewer days.

Other Ways to Save on Interest

In addition to opting for the shorter lock period, there are several ways you may be able to attain the best rate. The more the down payment, the better your rate will be, since you will be starting with more equity. You might opt to pay points to improve your interest rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You will pay more up front, but you will save money, especially if you don't refinance early.

ADVISORY MORTGAGE can walk you through the pitfalls of getting a mortgage. Give us a call at 8102292820.