"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking It In
A rate "lock" or "commitment" is a promise from the lender to lock in a certain interest rate and a certain number of points for you for a specified period of time during your application process. This protects you from getting through your whole application process and finding out at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer period generally costing more. A lender will agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
More Ways to Save on Interest
There are other ways to get a low rate, in addition to choosing a shorter rate lock period. A larger down payment will give you a better interest rate, because you will be starting out with more equity. You might opt to pay points to lower your rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the rate over the term of the loan. You are paying more up front, but you'll save money in the long run.
Pioneer Mortgage Corp can walk you through the pitfalls of getting a mortgage. Call us at 781-245-4924.