"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to freeze a certain interest rate and a certain number of points for you for a specified period of time during your application process. This keeps you from getting through your entire application process and learning at the end that your interest rate has gotten higher.
While there can be a choice of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. You can get a longer period for your lock, but in making this choice, will probably have a higher rate than you would have with a shorter period
Other Ways to Save on Interest
In addition to choosing the shorter rate lock period, there are several ways you can get the lowest rate. A larger down payment will result in a reduced interest rate, because you'll have a good amount of equity at the start. You may choose to pay points to lower your interest rate over the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the interest rate over the life of the loan. You are paying more initially, but you'll save money in the long run.
At America's Money Source, we answer questions about this process every day. Give us a call: (407) 898-7559.
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