Getting a Low Interest Rate

Locking It In

A rate "lock" or "commitment" is a lender's promise to hold a particular interest rate and a certain number of points for you for a specified period while your application is processed. This prevents you from working through your entire application process and discovering at the end that your interest rate has gone up.

Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer ones typically costing more. A lending institution will agree to lock in an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Other Interest Saving Strategies

There are other ways to get a reduced rate, in addition to choosing a shorter rate lock period. The larger the down payment, the lower the interest rate will be, because you will have more equity from the start. You might opt to pay points to bring down your rate for the term of the loan, meaning you pay more up front. One strategy that is a good option 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 long run.

At Morgage 27, we answer questions about this process every day. Give us a call at 4054206125.

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