"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 hold a specific interest rate and a certain number of points for you for a specified period while your application is processed. This ensures that your interest rate cannot go up while you are going through the application process.

Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer spans generally costing more. A lending institution may 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.

Other Interest Saving Strategies

There are other ways to get a reduced rate, besides choosing a shorter rate lock period. A bigger down payment will result in a reduced interest rate, since you are starting out with a good deal of equity. You can pay points to improve your interest rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you'll save money in the end.

Carter Financial Solutions can walk you through the pitfalls of getting a mortgage. Give us a call at 8668408745.


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Carter Financial Solutions

2291 W. March Ln Suite A100
Stockton, CA 95207