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

What is a Rate Lock?

When you are offered a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate for a determined period while you work on the application process. This protects you from working through your whole application process and learning at the end that your interest rate has gone up.

While there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. A lender will agree to hold an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

More Ways to Save on Interest

In addition to going with a shorter rate lock period, there are other ways you are able to attain the best rate. The larger the down payment, the smaller your interest rate will be, since you will be entering the loan with more equity. You can pay points to lower your rate for the loan term, meaning you pay more up front. 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 initially, but you will save money in the long run.

Harbor View Lending* a DBA of Megastar Financial can walk you through the pitfalls of getting a mortgage. Give us a call: (207) 571-8034.