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

What is a Rate Lock?

When you are promised a "rate lock" from a lender, it means that you are guaranteed to get a specific interest rate for a determined period for the application process. This ensures that your interest rate can't go up during the application process.

Although there are several lengths of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lender may agree to hold an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to choosing the shorter rate lock period, there are other ways you may be able to attain the best rate. A larger down payment will get you a lower interest rate, since you'll have more equity at the start. You can pay points to lower 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 life of the loan. You pay more up front, but you will save money in the long run.

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