"Rate Lock" and other Ways to Get a Lower Interest Rate
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What is a Rate Lock?
When you're offered a "rate lock" from your lender, it means that you are guaranteed to keep a particular interest rate over a determined period for your application process. This means your interest rate won't get higher during the application process.
Although there might be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. The lender may agree to hold an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to opting for the shorter rate lock period, there are more ways you are able to attain the best rate. The larger down payment you pay, the lower the interest rate will be, since you will be entering the loan with more equity. You can pay points to improve 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 up front, but you will come out ahead in the long run.
At SquareLend, we answer questions about this process every day. Give us a call: 5627733870.