"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
When you're offered a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate over a determined period while you work on the application process. This ensures that your interest rate can't go up during the application process.
Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer period generally costing more. A lending institution may agree to freeze an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Additional Ways to Save on Interest
There are other ways to get a good rate, besides agreeing to a shorter rate lock period. The larger down payment you make, the smaller your interest rate will be, as you will be entering the loan with more equity. You may opt to pay points to reduce your rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to reduce the interest rate over the term of the loan. You pay more initially, but you'll save money in the end.
Harbor View Lending* a DBA of Megastar Financial can answer questions about rate lock periods and many others. Give us a call: (207) 571-8034.