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

Locking in your Interest Rate

A rate "lock" or "commitment" is a lender's promise to hold a certain interest rate and a particular number of points for you for a certain period while your application is processed. This means your interest rate can't rise during the application process.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones usually costing more. You can get a longer period for your lock, but in doing so, will likely have a higher rate than you would with a shorter span of time

More Ways to Get a Great Interest Rate

In addition to choosing a shorter lock period, there are other ways you can get the lowest rate. The bigger down payment you can make, the better the rate will be, as you will be entering the loan with more equity. You may opt to pay points to reduce your interest rate for 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 term of the loan. You'll pay more initially, but you'll save money in the end.

At Chris Caggiano - Grand Oaks Funding, LLC, we answer questions about this process every day. Call us at (718) 477-4405.

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