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

What is a Rate Lock?

When you are offered a "rate lock" from your lender, it means that you are guaranteed to keep a specific interest rate for a certain number of days while you work on the application process. This prevents you from getting through your entire application process and discovering at the end that your interest rate has gotten higher.

While there may be a choice of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. You can get a longer period for your lock, but in making this choice, will probably have a higher interest rate than you would have with a shorter period

Other Interest Saving Strategies

There are other ways to get a good rate, in addition to going with a shorter rate lock period. The more the down payment, the better your interest rate will be, since you will have more equity from the start. You can pay points to bring down your rate over the term 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 initially, but you'll come out ahead in the long run.

Alerus Mortgage can answer questions about rate lock periods & many others. Give us a call: 952 417 8481.

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