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

What is a Rate Lock?

When you are offered a "rate lock" from a lender, it means that you are guaranteed to get a specific interest rate over a certain number of days while you work on the application process. This means your interest rate will not go up during the application process.

Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer ones usually costing more. The lending institution will 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 are able to attain the lowest rate. The bigger the down payment, the better the interest rate will be, because you will have more equity from the start. You can pay points to lower your interest rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the interest rate over the life of the loan. You'll pay more initially, but you'll save money in the end.

Mission Home Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (619) 688-0011.

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