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

Locking in your Interest Rate

When you're offered a "rate lock" from a lender, it means that you are guaranteed to get a set interest rate over a certain number of days while you work on the application process. This ensures that your interest rate will not go up during the application process.

While there are several lengths of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. A lender will agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to choosing the shorter rate lock period, there are more ways you can attain the best rate. A bigger down payment will give you a better interest rate, because you'll be starting out with more equity. You might opt to pay points to improve 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 up front, but you will come out ahead in the end.

At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about this process every day. Call us: 214-300-8756.