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

Locking in your Interest Rate

When you're offered a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate over a determined period for the application process. This ensures that your interest rate will not get higher while you are going through the application process.

Although there may be a choice of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. The lending institution can agree to hold an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to choosing the shorter rate lock period, there are more ways you can score the best rate. The larger down payment you can make, the smaller your interest rate will be, as you will be starting with more equity. You can pay points to improve your rate for the life of the loan, 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 life of the loan. You'll pay more up front, but you will come out ahead in the long run.

Chris Caggiano - Grand Oaks Funding, LLC can walk you through the pitfalls of getting a mortgage. Give us a call: (718) 477-4405.

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