"Rate Lock" and other Ways to Get a Lower Interest Rate
Freezing the Rate
A rate "lock" or "commitment" is a lender's promise to set a certain interest rate and a particular number of points for you for a specified period of time while your application is processed. This keeps you from going through your whole application process and finding out at the end that the interest rate has risen higher.
Although there may be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. You can get a longer period for your lock, but in doing so, will probably have a higher rate than you would have with a shorter span of time
Other Ways to Save on Interest
There are other ways to get a better rate, besides going with a shorter rate lock period. A bigger down payment will get you a better interest rate, because you're starting out with more equity. You might choose to pay points to bring down your interest 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 life of the loan. You are paying more initially, but you'll save money in the long run.
Mario Vega can answer questions about rate lock periods and many others. Call us: 877-310-6200.
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