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

Lock It In

A rate "lock" or "commitment" is a lender's promise to set a certain interest rate and a certain number of points for you for a certain period during your application process. This saves you from getting through your entire application process and finding out at the end that your interest rate has gone up.

Although there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. You can get a longer period for your lock, but in making this choice, will likely have a higher interest rate than you would with a shorter rate lock period

Other Ways to Save on Interest

There are more ways to get a low rate, in addition to going with a shorter rate lock period. The larger down payment you can pay, the smaller your interest rate will be, since you will be entering the loan with more equity. You can pay points to reduce your rate over 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 life of the loan. You will pay more initially, but you'll come out ahead, especially if you don't refinance early.

At Alerus Mortgage, we answer questions about this process every day. Call us: 952 417 8481.

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