"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 freeze a specific interest rate and a certain number of points for you for a specified period while your application is processed. This means your interest rate won't rise while you are going through the application process.

Although there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. A lending institution can agree to freeze an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Other Interest Saving Strategies

In addition to opting for the shorter rate lock period, there are more ways you may be able to attain the lowest rate. The larger down payment you pay, the better the rate will be, since you will have more equity from the start. You could choose to pay points to lower 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 reduce the rate over the term of the loan. You are paying more initially, but you will come out ahead in the long run.

At The Mortgage Exchange Service LLC, we answer questions about this process every day. Call us at 703.255-5810.

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