"Rate Lock" and other Ways to Get a Lower Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a lender's promise to freeze a particular interest rate and a certain number of points for you for a specified period while your application is processed. This means your interest rate won't get higher during the application process.

Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer period typically costing more. A lender will agree to lock in 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 that of a rate lock of a shorter period.

Other Interest Saving Strategies

There are more ways to get a reduced rate, besides choosing a shorter rate lock period. The bigger the down payment, the lower the interest rate will be, as you will have more equity from the start. You can pay points to reduce your interest rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you will come out ahead, especially if you don't refinance early.

U.S.A. Lending, Inc. can walk you through the pitfalls of getting a mortgage. Call us at 305-967-7200.