"Rate Lock" and other Ways to Get a Lower Interest Rate
Freezing the 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 certain period during your application process. This saves you from getting through your whole application process and finding out at the end that the interest rate has gotten higher.
Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer period usually costing more. The lending institution may agree to freeze an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Other Interest Saving Strategies
There are more ways to get a better rate, besides agreeing to a shorter rate lock period. The larger the down payment, the better the interest rate will be, because you will have more equity from the beginning. You can pay points to improve your rate over the term of the loan, meaning you pay more up front. One strategy that is a good option 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 will save money in the long run.
Harbor View Lending* a DBA of Megastar Financial can answer questions about rate lock periods & many others. Call us: (207) 571-8034.