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

Locking It In

When you're offered a "rate lock" from your lender, it means that you are guaranteed to keep a certain interest rate for a determined period while you work on your application process. This means your interest rate will not grow as you are working through the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lender will agree to hold an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Other Interest Saving Strategies

In addition to going with a shorter lock period, there are several ways you can score the lowest rate. A larger down payment will get you a better interest rate, since you will have a good deal of equity from the beginning. You can pay points to reduce 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 reduce the rate over the life of the loan. You pay more initially, but you'll save money in the long run.

Diamond Mortgage, LLC can walk you through the pitfalls of getting a mortgage. Call us: 3178427744.