Getting a Low Interest Rate

Freezing the Rate

When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a specific interest rate for a determined period while you work on the application process. This ensures that your interest rate cannot rise as you are working through the application process.

While there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. You can get a longer period for your lock, but in choosing this option, will likely have a higher rate than you would have with a shorter rate lock period

Other Ways to Save on Interest

There are more ways to get a good rate, besides choosing a shorter rate lock period. The larger down payment you can pay, the better your interest rate will be, as you will have more equity from the start. You can pay points to lower your interest rate over the term of the loan, 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 life of the loan. You will pay more initially, but you'll come out ahead, especially if you don't refinance early.

American Mortgage Advisers, Inc can answer questions about rate lock periods and many others. Call us at 2147390569.