"Rate Lock" and other Ways to Get a Lower Interest Rate
Lock It In
A rate "lock" or "commitment" is a promise from the lender to lock in a particular interest rate and a particular number of points for you for a certain period during your application process. This saves you from going through your whole application process and learning at the end that your interest rate has gone up.
Although there can be a choice of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. A lender will agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
Other Interest Saving Strategies
There are more ways to get a reduced rate, besides opting for a shorter rate lock period. The larger down payment you pay, the better your interest rate will be, because you will be starting with more equity. You can pay points to lower your rate over the loan term, meaning you pay more initially. To a lot of people, this makes sense and is a good deal..
At American Mortgage Advisers, Inc, we answer questions about this process every day. Call us at 214-865-7442.
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