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

What is a Rate Lock?

A rate "lock" or "commitment" is a lender's promise to freeze a particular interest rate and a specific number of points for you for a certain period during your application process. This ensures that your interest rate cannot get higher during the application process.

Although there can be a choice of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. You can get a longer period for your lock, but in doing so, will most likely have a higher interest rate than you would with a shorter period

Other Ways to Save on Interest

There are more ways to get a good rate, in addition to opting for a shorter rate lock period. The larger the down payment, the better your interest rate will be, since you will be starting with more equity. You might choose to pay points to lower your rate for the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to reduce the rate over the term of the loan. You'll pay more initially, but you'll come out ahead in the long run.

At Northeast Bancorp of America, Inc., we answer questions about this process every day. Call us: (440) 234-9660.

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