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

Freezing the Rate

A rate "lock" or "commitment" is a lender's promise to freeze a specific interest rate and a specific number of points for you for a specified period while your application is processed. This ensures that your interest rate cannot grow during the application process.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer period usually costing more. You can get a longer period for your lock, but in doing so, will likely have a higher rate than you would have with a shorter span of time

More Ways to Get a Great Interest Rate

There are more ways to get a low rate, besides agreeing to a shorter rate lock period. The bigger down payment you can pay, the smaller your rate will be, since you will be starting with more equity. You might opt to pay points to reduce your rate for the life of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you will save money, especially if you keep the loan for the full term.

At American Mortgage Advisers, Inc, we answer questions about this process every day. Give us a call at 2148657442.