"Rate Lock" and other Ways to Get a Lower Interest Rate
Lock It In
A rate "lock" or "commitment" is a lender's promise to lock in a certain interest rate and a particular number of points for you for a specified period of time while your application is processed. This saves you from going through your whole application process and finding out at the end that the interest rate has gone up.
Although there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. A lender may agree to hold an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
More Ways to Save on Interest
In addition to choosing the shorter rate lock period, there are more ways you may be able to score the best rate. A bigger down payment will give you a reduced interest rate, because you will have a good amount of equity from the beginning. You may opt to pay points to lower your rate for the life of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to improve the rate over the term of the loan. You will pay more initially, but you'll save money in the end.
Saab Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 703-288-0777.
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