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

Lock It In

A rate "lock" or "commitment" is a promise from the lender to freeze a particular interest rate and a specific number of points for you for a certain period of time while your application is processed. This means your interest rate won't rise as you are going through the application process.

While there can be a choice of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. The lender will agree to lock in an interest rate and points for a longer span of time, such as 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 other ways to get a good rate, in addition to opting for a shorter rate lock period. A bigger down payment will give you a lower interest rate, because you will be starting out with more equity. You might opt to pay points to bring down your rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the rate over the term of the loan. You pay more initially, but you'll save money in the long run.

Firelight Mortgage Consultants can walk you through the pitfalls of getting a mortgage. Give us a call at (303) 228-2254.

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