"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a promise from the lender to set a specific interest rate and a specific number of points for you for a certain period while your application is processed. This means your interest rate will not grow while you are working through the application process.
Although there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. A lending institution will agree to lock in an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
Other Interest Saving Strategies
There are other ways to get a lower rate, in addition to choosing a shorter rate lock period. A larger down payment will give you a reduced interest rate, since you'll have a good deal of equity at 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 sense and is a good deal..
At Alternative Mortgage Group, we answer questions about this process every day. Give us a call at 561-395-4264.