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

Locking It In

A rate "lock" or "commitment" is a promise from the lender to freeze a particular interest rate and a certain number of points for you for a specified period during your application process. This keeps you from working through your entire application process and discovering at the end that the interest rate has gone up.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones typically costing more. The lender can agree to hold an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be more than that of 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. A larger down payment will give you a better interest rate, since you will have a good amount of equity at the start. You could opt to pay points to bring down your rate over the life of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you'll save money in the long run.

MidTowne Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: (478) 746-2063.

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