Getting a Low Interest Rate
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Locking It In
A rate "lock" or "commitment" is a promise from the lender to set 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 getting through your entire application process and finding out at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, between 15 to 60 days, with the longer period usually costing more. The lending institution can 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 with a rate lock of a shorter period.
Other Interest Saving Strategies
There are other ways to get a better rate, in addition to agreeing to a shorter rate lock period. The larger down payment you can make, the better the interest rate will be, as you will have more equity from the beginning. You may choose to pay points to lower your rate over the term of the loan, meaning you pay more initially. For a lot of people, this makes financial sense..
Bonnie Andrews can walk you through the pitfalls of getting a mortgage. Call us at 901-674-8593.