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

Locking It In

A rate "lock" or "commitment" is a lender's promise to set a certain interest rate and a particular number of points for you for a certain period of time during your application process. This means your interest rate won't grow as you are working through the application process.

Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer spans usually costing more. The lending institution will agree to lock in an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than that of 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 can score the lowest rate. The more the down payment, the lower the interest rate will be, as you will have more equity from the beginning. You can pay points to improve your rate for the term of the loan, meaning you pay more up front. 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 are paying more up front, but you'll come out ahead, especially if you don't refinance early.

The Lending Source can answer questions about rate lock periods & many others. Call us: 9736012122.

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