Getting a Low Interest Rate

Locking in your Interest Rate

When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate over a certain number of days while you work on the application process. This protects you from going through your whole application process and learning at the end that your interest rate has gone up.

Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer period typically costing more. The lender will agree to freeze 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 higher than that of a rate lock of a shorter period.

More Ways to Save on Interest

In addition to choosing a shorter lock period, there are other ways you can attain the best rate. The more the down payment, the smaller the interest rate will be, because you will have more equity from the start. You might choose to pay points to reduce your rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You pay more up front, but you will come out ahead in the long run.

At Firelight Mortgage Consultants, we answer questions about this process every day. Call us at (303) 228-2254.

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