Getting a Low Interest Rate

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What is a Rate Lock?

A rate "lock" or "commitment" is a promise from the lender to lock in a particular interest rate and a specific number of points for you for a certain period of time while your application is processed. This saves you from working through your entire application process and learning at the end that your interest rate has gotten higher.

Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer ones usually costing more. The lending institution will agree to freeze an interest rate and points for a longer period, such as 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 going with a shorter rate lock period. The more the down payment, the lower your rate will be, since you will have more equity from the start. You can pay points to reduce your interest rate for the life of the loan, meaning you pay more up front. To many people, this makes financial sense..

At Mark Campbell, we answer questions about this process every day. Call us: 7274926100.