"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 certain number of points for you for a specified period while your application is processed. This prevents you from going through your entire application process and learning at the end that the interest rate has gone up.

Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer spans usually costing more. The lender may agree to freeze an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

In addition to choosing a shorter rate lock period, there are several ways you are able to attain the best rate. The larger the down payment, the better the rate will be, as you will be entering the loan with more equity. You can pay points to reduce your rate over the loan term, 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'll come out ahead in the long run.

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

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