Getting a Low Interest Rate

Freezing the Rate

When you're promised a "rate lock" from your lender, it means that you are guaranteed to keep a specific interest rate over a determined period while you work on the application process. This keeps you from going through your entire application process and finding out at the end that your interest rate has gotten higher.

Although there can be a choice of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. A lending institution will agree to lock in an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

More Ways to Save on Interest

In addition to choosing the shorter rate lock period, there are several ways you may be able to score the best rate. A bigger down payment will give you a reduced interest rate, since you're starting out with a good deal of equity. You may opt to pay points to bring down your rate for 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 term of the loan. You pay more up front, but you'll save money in the end.

At Norcal Capital Group, Inc, we answer questions about this process every day. Give us a call at (650) 689-5684.

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