"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 certain number of points for you for a certain period of time during your application process. This ensures that your interest rate can't grow while you are going through the application process.

Although there might be a choice of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. The lender may agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Other Interest Saving Strategies

There are other ways to get a low rate, in addition to going with a shorter rate lock period. A larger down payment will give you a better interest rate, since you'll have a good deal of equity from the beginning. You may choose to pay points to bring down your rate over the life of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to improve the interest rate over the term of the loan. You pay more initially, but you'll save money, especially if you don't refinance early.

At U.S.A. Lending, Inc., we answer questions about this process every day. Call us: 305-967-7200.