"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 freeze a specific interest rate and a certain number of points for you for a certain period while your application is processed. This prevents you from working through your entire application process and discovering at the end that your interest rate has gotten higher.

Although there may be a choice of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. The lending institution will agree to freeze an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Additional Ways to Save on Interest

In addition to going with the shorter rate lock period, there are several ways you are able to get the best rate. The larger the down payment, the smaller the interest rate will be, because you will have more equity from the start. You can pay points to lower your interest rate for the term of the loan, meaning you pay more initially. For many people, this makes sense and is a good deal..

At Home Mortgage Lenders, Inc., we answer questions about this process every day. Give us a call: 8139881776.

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