"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to lock in a particular interest rate and a particular number of points for you for a certain period while your application is processed. This ensures that your interest rate won't grow during the application process.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones typically costing more. A lender will agree to hold an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.
Other Ways to Save on Interest
In addition to choosing a shorter rate lock period, there are other ways you are able to attain the lowest rate. A larger down payment will get you a better interest rate, because you'll have more equity at the start. You could opt to pay points to bring down your interest rate for the term of the loan, meaning you pay more up front. To a lot of people, this makes sense and is a good deal..
At U.S.A. Lending, Inc., we answer questions about this process every day. Give us a call at 305-967-7200.