Getting a Low Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a lender's promise to lock in a particular interest rate and a certain number of points for you for a certain period during your application process. This prevents you from getting through your whole application process and learning at the end that your interest rate has risen higher.
Rate lock periods can vary in length, between 15 to 60 days, with the longer period usually costing more. A lending institution may agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to going with the shorter lock period, there are other ways you are able to get the lowest rate. The larger the down payment, the lower the interest rate will be, because you will be entering the loan with more equity. You may opt to pay points to reduce your interest rate over the term of the loan, meaning you pay more initially. One strategy that is a good option 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 in the end.
At Executive Lending Group, LLC, we answer questions about this process every day. Give us a call at 8165258000.
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