Getting a Low Interest Rate

What is a Rate Lock?

When you are offered a "rate lock" from the lender, it means that you are guaranteed to get a set interest rate over a certain number of days for the application process. This ensures that your interest rate can't go up during the application process.

While there may be a choice of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. A lending institution can agree to lock in an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to opting for a shorter rate lock period, there are other ways you can get the lowest rate. A larger down payment will give you a lower interest rate, since you are starting out with a good deal of equity. You could opt to pay points to improve your rate for the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to improve the interest rate over the life of the loan. You pay more initially, but you'll come out ahead in the end.

Homewood Mortgage, Inc. can answer questions about rate lock periods & many others. Call us at 205-941-1484.

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