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

Locking in your Interest Rate

A rate "lock" or "commitment" is a promise from the lender to freeze a specific interest rate and a particular number of points for you for a specified period of time while your application is processed. This means your interest rate can't rise during the application process.

Although there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. A lender may agree to freeze an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

Additional Ways to Save on Interest

There are other ways to get a good rate, besides agreeing to a shorter rate lock period. The larger the down payment, the lower your rate will be, because you will have more equity from the beginning. You could choose to pay points to bring down your rate over the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to improve the rate over the life of the loan. You pay more up front, but you'll save money, especially if you keep the loan for the full term.

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