"Rate Lock" and other Ways to Get a Lower Interest Rate
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Lock It In
A rate "lock" or "commitment" is a lender's promise to freeze a specific interest rate and a particular number of points for you for a certain period of time while your application is processed. This means your interest rate cannot go up while you are going through the application process.
Although there might be a choice of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. A lending institution may agree to freeze 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.
More Ways to Save on Interest
In addition to opting for the shorter lock period, there are other ways you can attain the lowest rate. The larger the down payment, the lower the interest rate will be, as you will be entering the loan with more equity. You may opt to pay points to improve your interest rate over the loan term, 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'll pay more initially, but you will come out ahead, especially if you keep the loan for a long time.
The Mortgage House can walk you through the ins and outs of when to lock in your interest rate. Give us a call: (903) 747-1800.