Getting a Low Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to freeze a specific interest rate and a specific number of points for you for a certain period while your application is processed. This protects you from going through your entire application process and learning at the end that your interest rate has gotten higher.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer spans usually costing more. You can get a longer period for your lock, but in doing so, will probably have a higher interest rate than you would have with a shorter period
Additional Ways to Save on Interest
In addition to opting for a shorter lock period, there are more ways you can get the lowest rate. A bigger down payment will get you a reduced interest rate, since you will have a good amount of equity from the beginning. You might opt to pay points to improve your interest rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the rate over the life of the loan. You pay more up front, but you will save money, especially if you don't refinance early.
Lake Area Mortgage can answer questions about rate lock periods and many others. Call us at 651-209-2900.