Getting a Low Interest Rate

Freezing the Rate

When you're offered a "rate lock" from the lender, it means that you are guaranteed to get a set interest rate over a determined period while you work on the application process. This means your interest rate can't rise as you are working through the application process.

While there may be a choice of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. A lending institution can agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.

Other Interest Saving Strategies

There are other ways to get a better rate, in addition to agreeing to a shorter rate lock period. The larger down payment you can pay, the lower the interest rate will be, as you will have more equity from the beginning. You can pay points to improve your interest rate over the life of the loan, meaning you pay more initially. 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 are paying more up front, but you'll save money, especially if you don't refinance early.

Alternative Mortgage Group can answer questions about rate lock periods and many others. Call us at 561-395-4264.