"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 set a certain interest rate and a particular number of points for you for a specified period during your application process. This keeps you from working through your whole application process and finding out at the end that the interest rate has gone up.
Although there can be a choice of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. A lending institution may 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 with a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
In addition to going with a shorter lock period, there are other ways you can score the best rate. The more the down payment, the better your interest rate will be, because you will be starting with more equity. You could opt to pay points to bring down your rate for the loan term, 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'll pay more initially, but you will save money in the end.
Ward Kilduff Mortgage can answer questions about rate lock periods & many others. Call us: (860) 658-7100.
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