"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 lock in a particular interest rate and a certain number of points for you for a specified period during your application process. This means your interest rate cannot rise during the application process.
Rate lock periods can vary in length, between 15 to 60 days, with the longer period typically costing more. A lending institution will agree to lock in 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 that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to choosing the shorter rate lock period, there are other ways you may be able to attain the best rate. The larger down payment you make, the smaller the rate will be, as you will be starting with more equity. You can pay points to lower your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the life of the loan. You will pay more initially, but you will come out ahead in the long run.
At Washingtonian Mortgage, LLC, we answer questions about this process every day. Give us a call: 410-451-2755.