Getting a Low Interest Rate
Lock It In
A rate "lock" or "commitment" is a promise from the lender to set a particular interest rate and a particular number of points for you for a certain period of time while your application is processed. This means your interest rate won't rise as you are working through the application process.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones generally costing more. The lending institution can agree to hold an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are other ways to get a better rate, in addition to choosing a shorter rate lock period. A larger down payment will result in a better interest rate, since you will have more equity from the beginning. You could opt to pay points to lower 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 interest rate over the term of the loan. You'll pay more up front, but you will come out ahead in the long run.
At Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234, we answer questions about this process every day. Call us: 214-663-5355.