"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to hold a particular interest rate and a particular number of points for you for a specified period during your application process. This means your interest rate will not get higher while you are working through the application process.
While there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. The lender may 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 with a rate lock of fewer days.
Other Ways to Save on Interest
In addition to going with a shorter lock period, there are more ways you can score the lowest rate. A bigger down payment will result in a reduced interest rate, because you will have a good amount of equity from the beginning. You may opt to pay points to bring down your interest rate over the term of the loan, meaning you pay more initially. To many people, this makes financial sense..
At Washingtonian Mortgage, LLC, we answer questions about this process every day. Call us at 410-451-2755.