"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 freeze a particular interest rate and a particular number of points for you for a specified period while your application is processed. This keeps you from working through your entire application process and finding out at the end that your interest rate has risen higher.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer ones generally costing more. A lending institution can agree to freeze an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

There are more ways to get a low rate, besides opting for a shorter rate lock period. A bigger down payment will get you a lower interest rate, because you are starting out with a good deal of equity. You could choose to pay points to improve your interest rate for the life of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to reduce the rate over the life of the loan. You pay more initially, but you will come out ahead, especially if you don't refinance early.

U.S.A. Lending, Inc. can answer questions about rate lock periods and many others. Call us at 305-967-7200.