Getting a Low Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a specific number of points for you for a specified period while your application is processed. This means your interest rate won't get higher while you are going through the application process.
While there may be a choice of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. The lending institution will agree to hold an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Other Interest Saving Strategies
In addition to choosing a shorter lock period, there are several ways you may be able to get the best rate. The bigger down payment you make, the better the rate will be, as you will have more equity from the beginning. You can pay points to lower your rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you will save money, especially if you don't refinance early.
At Financial Edge Mortgage Corp., we answer questions about this process every day. Call us at 425-508-9988.
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