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

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to lock in a certain interest rate and a specific number of points for you for a certain period of time while your application is processed. This means your interest rate won't grow while you are working through the application process.

While there can be a choice of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. The lender will agree to hold an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

More Ways to Save on Interest

There are other ways to get a good rate, besides going with a shorter rate lock period. The bigger the down payment, the lower your interest rate will be, since you will have more equity from the beginning. You could opt to pay points to improve your interest rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the rate over the life of the loan. You pay more initially, but you will save money, especially if you keep the loan for a long time.

AmeriBest Mortgage can answer questions about rate lock periods & many others. Call us: 3217777277.