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

What is a Rate Lock?

A rate "lock" or "commitment" is a lender's promise to hold a certain interest rate and a specific number of points for you for a certain period during your application process. This protects you from getting through your entire application process and discovering at the end that the interest rate has risen higher.

Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer ones usually costing more. The lending institution may agree to freeze an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.

Other Interest Saving Strategies

In addition to opting for the shorter rate lock period, there are more ways you can get the lowest rate. The bigger the down payment, the better your rate will be, because you will have more equity from the start. You could choose to pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to improve the interest rate over the life of the loan. You will pay more initially, but you'll save money in the end.

Hawk Mortgage Group can walk you through the pitfalls of getting a mortgage. Call us at (443) 619-7900.

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