Getting a Low Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a lender's promise to freeze a specific interest rate and a particular number of points for you for a certain period of time during your application process. This means your interest rate cannot grow as you are working through the application process.
While there may be a choice of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lender may agree to freeze an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
Other Ways to Save on Interest
In addition to going with the shorter rate lock period, there are other ways you may be able to get the best rate. The larger down payment you pay, the better your rate will be, because you will be starting with more equity. You might opt to pay points to bring down your rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you'll save money in the end.
Financial Edge Mortgage Corp. can walk you through the pitfalls of getting a mortgage. Give us a call: 425-508-9988.
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