Getting a Low Interest Rate

Locking in your Interest Rate

A rate "lock" or "commitment" is a lender's promise to freeze a particular interest rate and a particular number of points for you for a specified period of time while your application is processed. This ensures that your interest rate will not get higher as you are going through the application process.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer period usually costing more. The lending institution may agree to hold 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 a shorter period.

More Ways to Save on Interest

There are more ways to get a better rate, in addition to opting for a shorter rate lock period. The larger the down payment, the smaller the interest rate will be, as you will be entering the loan with more equity. You may opt to pay points to lower your rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you'll save money in the end.

Ward Kilduff Mortgage can answer questions about rate lock periods and many others. Call us: (860) 658-7100.