"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 certain number of points for you for a certain period while your application is processed. This keeps you from going through your entire application process and finding out at the end that your interest rate has risen higher.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer ones typically costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher interest rate than you would have with a shorter span of time
More Ways to Save on Interest
There are other ways to get a good rate, in addition to agreeing to a shorter rate lock period. The larger the down payment, the lower the interest rate will be, because you will be starting with more equity. You may choose to pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you'll come out ahead in the end.
Ward Kilduff Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at (860) 658-7100.
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