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

Freezing the Rate

When you are offered a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate for a certain number of days while you work on your application process. This ensures that your interest rate cannot grow while you are working through the application process.

While there can be a choice of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lender can agree to hold an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to going with the shorter rate lock period, there are several ways you may be able to score the best rate. A larger down payment will give you a reduced interest rate, because you're starting out with more equity. You could opt to pay points to reduce your interest rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you will save money in the end.

At Norcal Capital Group, Inc, we answer questions about this process every day. Call us: (650) 689-5684.

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