"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
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 while your application is processed. This means your interest rate cannot go up as you are going through the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer ones generally costing more. A lender can agree to freeze 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 more than with a rate lock of fewer days.
More Ways to Save on Interest
There are more ways to get a reduced rate, besides going with a shorter rate lock period. A larger down payment will result in a better interest rate, since you'll have a good deal of equity from the beginning. You may opt to pay points to lower your interest rate over the term of the loan, meaning you pay more initially. To a lot of people, this makes financial sense..
Ward Kilduff Mortgage can walk you through the pitfalls of getting a mortgage. Call us: (860) 658-7100.
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