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

Lock It In

When you are offered a "rate lock" from the lender, it means that you are guaranteed to keep a set interest rate for a certain number of days while you work on the application process. This means your interest rate won't go up as you are working through the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. The lending institution will agree to lock in an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

In addition to going with a shorter rate lock period, there are more ways you can attain the best rate. A bigger down payment will give you a lower interest rate, because you will be starting out with a good deal of equity. You could choose to pay points to lower your interest rate for the life 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'll pay more up front, but you will save money, especially if you keep the loan for the full term.

Northeast Bancorp of America, Inc. can answer questions about rate lock periods & many others. Call us: (440) 234-9660.

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