Getting a Low Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to hold a particular interest rate and a particular number of points for you for a certain period of time during your application process. This means your interest rate cannot go up during the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. The lending institution will agree to hold an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to going with the shorter lock period, there are other ways you can attain the lowest rate. A bigger down payment will get you a reduced interest rate, since you'll have more equity at the start. You can pay points to improve 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 are paying more initially, but you'll come out ahead, especially if you don't refinance early.

Savers Home Loans can answer questions about rate lock periods and many others. Call us: (800) 974-0509.