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

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Locking in your Interest Rate

A rate "lock" or "commitment" is a promise from the lender to set a particular interest rate and a particular number of points for you for a certain period during your application process. This saves you from working through your entire application process and learning at the end that your interest rate has risen higher.

While there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lending institution can agree to lock in an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Additional Ways to Save on Interest

There are more ways to get a good rate, besides opting for a shorter rate lock period. A larger down payment will give you a lower interest rate, since you'll be starting out with more equity. You may opt to pay points to lower your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you will save money, especially if you keep the loan for the full term.

Milestone Mortgage dba TMC can answer questions about rate lock periods and many others. Give us a call at (303) 877-0415.

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