Getting a Low Interest Rate

Locking in your Interest Rate

A rate "lock" or "commitment" is a promise from the lender to set a specific interest rate and a certain number of points for you for a specified period of time while your application is processed. This ensures that your interest rate cannot get higher during the application process.

While there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. 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 a shorter period.

More Ways to Get a Great Interest Rate

In addition to going with a shorter lock period, there are more ways you can score the lowest rate. A bigger down payment will give you a better interest rate, since you'll have a good amount of equity from the beginning. You could choose to pay points to bring down your interest rate over the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the rate over the term of the loan. You'll pay more up front, but you'll save money, especially if you keep the loan for the full term.

At ADVISORY MORTGAGE, we answer questions about this process every day. Give us a call at 8102292820.