Getting a Low Interest Rate

Locking in your Interest Rate

A rate "lock" or "commitment" is a lender's promise to lock in a specific interest rate and a specific number of points for you for a certain period of time while your application is processed. This ensures that your interest rate will not go up as you are working through the application process.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer period usually costing more. The lender may agree to freeze an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

More Ways to Get a Great Interest Rate

There are more ways to get a lower rate, in addition to opting for a shorter rate lock period. A bigger down payment will give you a lower interest rate, since you're starting out with a good deal of equity. You can pay points to improve your interest rate over the life of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the life of the loan. You will pay more initially, but you'll come out ahead, especially if you don't refinance early.

America's Home Loans can answer questions about rate lock periods & many others. Give us a call: 701.222.0100.

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