"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
When you are promised a "rate lock" from the lender, it means that you are guaranteed to get a certain interest rate over a determined period for your application process. This ensures that your interest rate can't rise while you are working through the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer period typically costing more. You can get a longer period for your lock, but in making this choice, will most likely have a higher rate than you would have with a shorter period
Other Ways to Save on Interest
In addition to choosing a shorter rate lock period, there are several ways you can score the lowest rate. A bigger down payment will result in a better interest rate, because you will have more equity at the start. You might choose to pay points to lower your rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You pay more up front, but you'll come out ahead in the long run.
At U.S.A. Lending, Inc., we answer questions about this process every day. Give us a call: 305-967-7200.