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

Locking in your Interest Rate

A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a specific number of points for you for a certain period during your application process. This keeps you from getting through your whole application process and finding out at the end that your interest rate has risen higher.

Although there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. A lender will agree to lock in 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 a shorter period.

More Ways to Save on Interest

There are other ways to get a lower rate, in addition to choosing a shorter rate lock period. A bigger down payment will result in a lower interest rate, since you'll be starting out with a good deal of equity. You can pay points to bring down your rate over the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the interest rate over the life of the loan. You are paying more initially, but you will come out ahead, especially if you keep the loan for the full term.

At Stepping Stone Mortgage, we answer questions about this process every day. Call us: (541) 683-3300.

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