"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 particular interest rate and a certain number of points for you for a certain period of time during your application process. This means your interest rate cannot go up during the application process.

Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer period typically costing more. The lending institution can 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

In addition to choosing the shorter rate lock period, there are other ways you are able to attain the best rate. A bigger down payment will give you a lower interest rate, because you'll have more equity at the start. You can pay points to lower your 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 reduce the rate over the life of the loan. You will pay more initially, but you'll come out ahead, especially if you keep the loan for the full term.

At Reliance Mortgage Service, Inc, we answer questions about this process every day. Call us at 562 320-0510.

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