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

Freezing the Rate

When you're offered a "rate lock" from a lender, it means that you are guaranteed to get a certain interest rate for a determined period while you work on your application process. This keeps you from working through your whole application process and discovering at the end that your interest rate has gone up.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans typically costing more. A lending institution can agree to lock in an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Other Interest Saving Strategies

In addition to going with the shorter rate lock period, there are other ways you can get the best rate. A bigger down payment will give you a lower interest rate, since you will be starting out with more equity. You can pay points to reduce your interest rate over the term of the loan, meaning you pay more initially. To many people, this is a good option..

At Foxfield Financial, we answer questions about this process every day. Call us at 720-598-8300.

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