"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a promise from the lender to set a certain interest rate and a certain number of points for you for a certain period while your application is processed. This prevents you from going through your entire application process and discovering at the end that the interest rate has gotten higher.
Rate lock periods can vary in length, between 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, like 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Other Interest Saving Strategies
There are other ways to get a reduced rate, besides going with a shorter rate lock period. The bigger the down payment, the lower the rate will be, as you will have more equity from the start. You could opt to pay points to bring down your rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to reduce the rate over the term of the loan. You will pay more up front, but you will come out ahead in the long run.
Savers Home Loans can answer questions about rate lock periods and many others. Give us a call: (800) 974-0509.