Getting a Low Interest Rate

Freezing the Rate

When you're offered a "rate lock" from a lender, it means that you are guaranteed to keep a specific interest rate over a certain number of days for the application process. This keeps you from getting through your whole application process and discovering at the end that your interest rate has gone up.

Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer period usually costing more. The lender will agree to hold an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to choosing the shorter rate lock period, there are other ways you are able to get the best rate. A bigger down payment will result in a lower interest rate, because you will have a good deal of equity from the beginning. You can pay points to reduce your interest rate over the life of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the rate over the life of the loan. You'll pay more up front, but you'll come out ahead in the end.

At Custom Lending Group, we answer questions about this process every day. Give us a call at (707) 252-2700.

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