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

Lock 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 certain number of days while you work on the application process. This saves you from going through your entire application process and learning at the end that the interest rate has gotten higher.

Although there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. The lending institution will agree to lock in 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

There are more ways to get a good rate, in addition to opting for a shorter rate lock period. A bigger down payment will give you a lower interest rate, since you'll be starting out with a good deal of equity. You may choose to pay points to improve your interest rate over the life of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you will save money in the long run.

Capacity Lending, LLC can walk you through the pitfalls of getting a mortgage. Give us a call at 469-640-0400.

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