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

What is a Rate Lock?

When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a particular interest rate over a certain number of days for the application process. This protects you from going through your whole application process and discovering at the end that your interest rate has gotten higher.

Although there are several lengths of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. The lending institution will agree to lock in 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 that of a rate lock of fewer days.

Other Interest Saving Strategies

In addition to choosing a shorter lock period, there are more ways you can attain the best rate. The bigger down payment you can make, the lower the rate will be, since you will have more equity from the beginning. You might opt to pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you'll come out ahead in the end.

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

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