"Rate Lock" and other Ways to Get a Lower Interest Rate
Freezing the Rate
A rate "lock" or "commitment" is a promise from the lender to hold a particular interest rate and a specific number of points for you for a certain period of time while your application is processed. This prevents you from going through your whole application process and discovering at the end that the interest rate has gone up.
Although there are several lengths of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. The lender can 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 that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to choosing the shorter lock period, there are several ways you are able to attain the lowest rate. The more the down payment, the smaller the interest rate will be, because you will be starting with more equity. You might choose to pay points to improve your interest rate for the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to reduce the interest rate over the life of the loan. You are paying more initially, but you'll save money, especially if you keep the loan for the full term.
Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234 can answer questions about rate lock periods and many others. Give us a call: 214-663-5355.