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

Locking It In

When you are offered a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate for a determined period while you work on your application process. This ensures that your interest rate won't get higher during the application process.

Rate lock periods can vary in length, between 15 to 60 days, with the longer ones usually costing more. The lender can agree to lock in 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 with a rate lock of a shorter period.

Additional Ways to Save on Interest

There are other ways to get a low rate, in addition to going with a shorter rate lock period. The larger down payment you can make, the lower your interest rate will be, as you will have more equity from the start. You can pay points to bring down 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 bring the rate down over the life of the loan. You'll pay more initially, but you'll come out ahead, especially if you don't refinance early.

At Real Property Finance, we answer questions about this process every day. Give us a call: 310-379-5997.

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