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

Locking It In

A rate "lock" or "commitment" is a lender's promise to freeze a certain interest rate and a specific number of points for you for a certain period while your application is processed. This ensures that your interest rate won't get higher as you are working through the application process.

Although there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. The lender will agree to freeze 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.

Other Interest Saving Strategies

There are more ways to get a better rate, besides opting for a shorter rate lock period. The larger down payment you can make, the lower your rate will be, as you will be starting with more equity. You could opt to pay points to improve your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You are paying more up front, but you'll come out ahead, especially if you keep the loan for the full term.

At Coastal Mortgage Corp., we answer questions about this process every day. Give us a call at 504-866-5626.

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