Getting a Low Interest Rate

Locking in your Interest Rate

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

Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer ones typically costing more. The lender will agree to hold an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to opting for a shorter lock period, there are more ways you can get the lowest rate. The larger the down payment, the smaller the rate will be, since you will be starting with more equity. You could opt to pay points to reduce your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to improve the rate over the term of the loan. You pay more initially, but you'll come out ahead, especially if you don't refinance early.

Statewide Funding can answer questions about rate lock periods & many others. Give us a call at (415) 456-7802.

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