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

Freezing the Rate

When you are promised a "rate lock" from the lender, it means that you are guaranteed to get a certain interest rate for a certain number of days for your application process. This keeps you from going through your whole application process and finding out at the end that your interest rate has gotten higher.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans usually costing more. You can get a longer period for your lock, but in doing so, will probably have a higher interest rate than you would have with a shorter period

Other Interest Saving Strategies

There are other ways to get a reduced rate, besides opting for a shorter rate lock period. The bigger down payment you can make, 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 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'll pay more initially, but you will save money, especially if you don't refinance early.

Milestone Mortgage, Inc. can walk you through the pitfalls of getting a mortgage. Call us at (317) 595-9600.

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