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

Locking in your Interest Rate

When you're offered a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate over a determined period while you work on the application process. This means 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 period typically costing more. A lending institution will agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

Other Interest Saving Strategies

In addition to choosing a shorter rate lock period, there are other ways you can attain the best rate. The larger the down payment, the better your rate will be, since you will have more equity from the beginning. You may opt to pay points to bring down your interest rate for the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to improve the rate over the life of the loan. You'll pay more up front, but you'll save money, especially if you keep the loan for a long time.

At American Commerce Mortgage, we answer questions about this process every day. Give us a call: 714-970-9700.

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