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

Locking in your Interest Rate

When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate for a determined period for your application process. This saves you from going through your whole application process and discovering at the end that the interest rate has gone up.

Rate lock periods can vary in length, between 15 to 60 days, with the longer spans usually costing more. A lending institution will agree to freeze an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Additional Ways to Save on Interest

There are more ways to get a lower rate, in addition to agreeing to a shorter rate lock period. The larger the down payment, the smaller your rate will be, since you will be entering the loan with more equity. You may opt to pay points to lower your interest rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to improve the interest rate over the term of the loan. You'll pay more initially, but you will save money in the end.

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