Getting a Low Interest Rate

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Locking in your Interest Rate

When you are promised a "rate lock" from the lender, it means that you are guaranteed to get a certain interest rate over a certain number of days for your application process. This keeps you from getting through your entire application process and learning at the end that the interest rate has risen higher.

Although there might be a choice of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. A lender will agree to hold an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

More Ways to Save on Interest

In addition to choosing the shorter rate lock period, there are more ways you may be able to score the best rate. The bigger down payment you can make, the smaller your interest rate will be, because you will have more equity from the beginning. You could choose to pay points to reduce your interest rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to reduce the interest rate over the life of the loan. You'll pay more up front, but you'll come out ahead, especially if you keep the loan for a long time.

JOANNE AHN can answer questions about rate lock periods & many others. Call us at 415-999-2439.

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