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

Locking in your Interest Rate

When you are promised a "rate lock" from a lender, it means that you are guaranteed to get a certain interest rate for a certain number of days for the application process. This keeps you from getting through your whole application process and learning at the end that your interest rate has gone up.

While there may be a choice of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. The lender can agree to hold an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

Other Interest Saving Strategies

In addition to choosing the shorter rate lock period, there are other ways you can attain the lowest rate. A larger down payment will result in a better interest rate, since you will have more equity from the beginning. You can pay points to improve your interest rate for the life of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to improve the rate over the life of the loan. You'll pay more initially, but you will come out ahead, especially if you keep the loan for a long time.

AmeriBest Mortgage can answer questions about rate lock periods and many others. Give us a call: 3217777277.