"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a lender's promise to set a specific interest rate and a particular number of points for you for a certain period of time while your application is processed. This means your interest rate cannot grow while you are working through the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans usually costing more. A lending institution will agree to freeze an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with 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 reduced interest rate, since you'll have more equity at the start. You might opt to pay points to reduce your interest rate over the loan term, meaning you pay more up front. For 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: 305-967-7200.