"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 freeze a specific interest rate and a specific number of points for you for a certain period of time while your application is processed. This prevents you from working through your entire application process and learning at the end that your interest rate has gone up.

Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer period typically costing more. The lender can agree to hold an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

Additional Ways to Save on Interest

In addition to choosing the shorter lock period, there are several ways you are able to attain the lowest rate. The more the down payment, the lower your rate will be, as you will have more equity from the beginning. You can pay points to lower your rate over the term 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 will pay more up front, but you'll save money in the long run.

Net Equity Financial Mortgage can answer questions about rate lock periods and many others. Give us a call at (215)741-3131.

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