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

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What is a Rate Lock?

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

Although there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. A lender may agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Interest Saving Strategies

There are more ways to get a low rate, in addition to going with a shorter rate lock period. A larger down payment will result in a reduced interest rate, since you're starting out with a good deal of equity. You can pay points to lower your interest rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you will save money, especially if you keep the loan for a long time.

At Dove Lending Group, Inc., we answer questions about this process every day. Give us a call: 877-210-6899.