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 set interest rate over a certain number of days while you work on your application process. This ensures that your interest rate will not grow while you are going through the application process.

Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer ones typically costing more. The lender may agree to freeze an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to choosing the shorter lock period, there are more ways you are able to attain the best rate. The larger down payment you can make, the lower your interest rate will be, since you will have more equity from the beginning. You may choose to pay points to reduce your rate over the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to reduce the interest rate over the life of the loan. You'll pay more initially, but you'll save money, especially if you don't refinance early.

Farm Credit of the Virginias can answer questions about rate lock periods and many others. Call us at (800) 919-3276.

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