"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 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 go up during the application process.

Although there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lending institution may 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 more than with a rate lock of fewer days.

Additional Ways to Save on Interest

There are more ways to get a better rate, besides opting for a shorter rate lock period. The bigger down payment you can make, the better the interest rate will be, as you will have more equity from the beginning. You can pay points to lower your interest rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to improve the interest rate over the life of the loan. You pay more initially, but you'll save money in the long run.

At Atlantic Financial Services, we answer questions about this process every day. Call us: (732) 969-9300.

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