Getting a Low Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a particular number of points for you for a certain period while your application is processed. This ensures that your interest rate won't go up during the application process.

While there can be a choice of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. A 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 fewer days.

More Ways to Save on Interest

In addition to opting for the shorter lock period, there are more ways you can score the best rate. A larger down payment will give you a reduced interest rate, since you will have a good amount of equity at the start. You may choose to pay points to reduce your interest rate over the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to improve the rate over the life of the loan. You'll pay more up front, but you'll come out ahead, especially if you keep the loan for a long time.

At Milestone Mortgage, Inc. NMLS#136714, we answer questions about this process every day. Call us: 3175959600.

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Milestone Mortgage, Inc. NMLS#136714

7168 Graham Road Suite 175
Indianapolis, IN 46250-2683