"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 freeze a particular interest rate and a specific number of points for you for a specified period during your application process. This saves you from getting through your whole application process and learning at the end that your interest rate has risen higher.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones typically costing more. The lender will agree to hold an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Additional Ways to Save on Interest

In addition to going with a shorter rate lock period, there are other ways you can attain the best rate. A bigger down payment will result in a reduced interest rate, since you're starting out with a good deal of equity. You could opt to pay points to lower your rate for the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You are paying more initially, but you will save money, especially if you don't refinance early.

At 1st Credential Mortgage Inc, we answer questions about this process every day. Give us a call: (281) 778-0805.

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