"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a certain number of points for you for a certain period of time while your application is processed. This means your interest rate cannot grow while you are working through the application process.
While there may be a choice of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. A lending institution can agree to lock in an interest rate and points for a longer span of time, such as 60 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 going with the shorter rate lock period, there are other ways you can get the lowest rate. A larger down payment will get you a better interest rate, since you will have a good amount of equity from the beginning. You might opt to pay points to reduce your rate for the life of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You will pay more up front, but you will save money in the end.
Ward Kilduff Mortgage can walk you through the pitfalls of getting a mortgage. Call us: (860) 658-7100.
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