Getting a Low Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to lock in a certain interest rate and a certain number of points for you for a specified period of time during your application process. This means your interest rate can't rise as you are going through the application process.
While there may be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. The lender may agree to freeze an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to going with the shorter lock period, there are other ways you are able to get the best rate. A larger down payment will give you a better interest rate, since you'll have more equity at the start. You might opt to pay points to lower your rate for the life of the loan, 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 life of the loan. You'll pay more initially, but you will come out ahead in the long run.
At Savers Home Loans, we answer questions about this process every day. Give us a call: (800) 974-0509.