"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a promise from the lender to hold a specific interest rate and a specific number of points for you for a certain period while your application is processed. This saves you from going through your whole application process and finding out at the end that your interest rate has gone up.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones usually costing more. A lender can agree to lock in an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
Other Interest Saving Strategies
There are other ways to get a better rate, in addition to going with a shorter rate lock period. A larger down payment will give you a lower interest rate, since you're starting out with a good deal of equity. You can pay points to lower your rate for the life of the loan, meaning you pay more initially. For a lot of people, this makes sense and is a good deal..
At Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234, we answer questions about this process every day. Give us a call at 214-663-5355.