Getting a Low Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a particular number of points for you for a certain period while your application is processed. This means your interest rate won't go up as you are working through the application process.
Although there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are usually more expensive. You can get a longer period for your lock, but in doing so, will most likely have a higher rate than you would have with a shorter rate lock period
Other Interest Saving Strategies
In addition to opting for the shorter lock period, there are other ways you can attain the best rate. The bigger down payment you can pay, the smaller the rate will be, since you will have more equity from the start. You can pay points to improve your interest rate over 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 pay more initially, but you will come out ahead in the end.
At Savers Home Loans, we answer questions about this process every day. Give us a call: (800) 974-0509.