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

What is a Rate Lock?

When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate for a determined period while you work on the application process. This protects you from getting through your whole application process and discovering at the end that the interest rate has risen higher.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones typically costing more. A lending institution may agree to hold an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Interest Saving Strategies

There are other ways to get a lower rate, besides going with a shorter rate lock period. A larger down payment will get you a reduced interest rate, because you'll have a good amount of equity from the beginning. You can pay points to reduce your interest rate over the loan term, 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 initially, but you'll come out ahead in the end.

Atlantic Financial Services can answer questions about rate lock periods & many others. Call us at (732) 969-9300.

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