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

What is a Rate Lock?

When you're promised a "rate lock" from your lender, it means that you are guaranteed to get a particular interest rate for a certain number of days while you work on your application process. This ensures that your interest rate can't grow as you are going through the application process.

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

More Ways to Get a Great Interest Rate

In addition to choosing the shorter rate lock period, there are more ways you are able to get the lowest rate. The more the down payment, the smaller the rate will be, as you will have more equity from the beginning. You can pay points to bring down your rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you will come out ahead in the end.

Pacificwide Lending can walk you through the pitfalls of getting a mortgage. Give us a call at 9254610500.

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