"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 freeze a particular interest rate and a particular number of points for you for a specified period of time during your application process. This ensures that your interest rate cannot grow during the application process.

Rate lock periods can vary in length, between 15 to 60 days, with the longer period usually costing more. A lending institution will agree to hold an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Save on Interest

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

At Statewide Funding, we answer questions about this process every day. Give us a call at (415) 456-7802.

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