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

What is a Rate Lock?

When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate for a determined period for your application process. This means your interest rate will not get higher during the application process.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans generally costing more. You can get a longer period for your lock, but in choosing this option, will probably have a higher interest rate than you would have with a shorter rate lock period

Additional Ways to Save on Interest

In addition to going with the shorter lock period, there are more ways you are able to score the lowest rate. The bigger the down payment, the lower your interest rate will be, because you will be starting with more equity. You can pay points to reduce your interest rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to improve the interest rate over the term of the loan. You'll pay more initially, but you'll come out ahead, especially if you don't refinance early.

Avalon Mortgage Services, Inc. can walk you through the pitfalls of getting a mortgage. Call us at (708) 403-5181.

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