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

Freezing the Rate

When you are offered a "rate lock" from the lender, it means that you are guaranteed to keep a specific interest rate over a determined period for your application process. This saves you from working through your whole application process and finding out at the end that the interest rate has gone up.

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

Other Interest Saving Strategies

There are more ways to get a low rate, in addition to choosing a shorter rate lock period. The larger down payment you pay, the lower your rate will be, since you will have more equity from the start. You may choose to pay points to improve your interest rate over the life of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you'll save money in the end.

At U.S.A. Lending, Inc., we answer questions about this process every day. Call us at 305-967-7200.




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