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

Freezing the Rate

When you're promised a "rate lock" from your lender, it means that you are guaranteed to keep a particular interest rate over a certain number of days for the application process. This protects you from getting through your whole application process and finding out at the end that your interest rate has risen higher.

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

Other Interest Saving Strategies

In addition to choosing the shorter lock period, there are more ways you may be able to score the best rate. A larger down payment will get you a better interest rate, since you are starting out with more equity. You can pay points to reduce your interest rate over the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to improve the rate over the life of the loan. You pay more initially, but you will save money, especially if you keep the loan for the full term.

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

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