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

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Freezing the Rate

When you are offered a "rate lock" from the lender, it means that you are guaranteed to keep a particular interest rate for a determined period for the application process. This protects you from going through your entire application process and finding out at the end that the interest rate has gone up.

Although there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. The lender may agree to hold an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

Additional Ways to Save on Interest

In addition to choosing the shorter lock period, there are several ways you may be able to get the lowest rate. A larger down payment will give you a better interest rate, since you're starting out with a good deal of equity. You can pay points to lower your rate for the loan term, meaning you pay more initially. For many people, this makes financial sense..

At Real Estate Loan 4 U, we answer questions about this process every day. Give us a call at (408) 255-3978.