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

What is a Rate Lock?

When you are offered a "rate lock" from a lender, it means that you are guaranteed to keep a set interest rate for a determined period for the application process. This ensures that your interest rate cannot rise during the application process.

While there might be a choice of rate lock periods (from 15 to 60 days), the longer spans are usually more expensive. You can get a longer period for your lock, but in doing so, will most likely have a higher rate than you would with a shorter span of time

Other Interest Saving Strategies

In addition to choosing the shorter lock period, there are other ways you can attain the best rate. A larger down payment will get you a reduced interest rate, because you will have a good deal of equity at the start. You can pay points to reduce your rate over the term of the loan, 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 pay more up front, but you'll save money, especially if you don't refinance early.

At Homewood Mortgage, Inc., we answer questions about this process every day. Give us a call at 205-941-1484.

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