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

Locking in your Interest Rate

When you're offered a "rate lock" from your lender, it means that you are guaranteed to keep a certain interest rate over a certain number of days for the application process. This keeps you from going through your entire application process and learning at the end that the interest rate has gotten higher.

Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer spans generally costing more. The lender will agree to hold an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to choosing the shorter rate lock period, there are other ways you are able to score the best rate. The larger down payment you can make, the smaller the interest rate will be, as you will be entering the loan with more equity. You might opt to pay points to lower your interest rate for the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to reduce the rate over the term of the loan. You will pay more initially, but you'll come out ahead in the end.

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