Getting a Low Interest Rate

Locking in your Interest Rate

When you are offered a "rate lock" from a 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 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, anywhere from 15 to 60 days, with the longer spans usually costing more. A lending institution may agree to freeze 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 more than that of a rate lock of fewer days.

Other Interest Saving Strategies

In addition to going with the shorter lock period, there are more ways you can score the lowest rate. A larger down payment will result in a better interest rate, since you'll have a good deal of equity at the start. You can pay points to bring down your rate for the life of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you'll save money in the long run.

At Nationwide Home Loans, we answer questions about this process every day. Call us at (562) 693-5048.

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