"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking It In
A rate "lock" or "commitment" is a lender's promise to hold a particular interest rate and a certain number of points for you for a certain period of time while your application is processed. This means your interest rate won't grow as you are working through the application process.
Although there may be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. The lender can agree to hold an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Other Interest Saving Strategies
There are other ways to get a better rate, besides going with a shorter rate lock period. A bigger down payment will give you a better interest rate, since you will have a good deal of equity at the start. You can pay points to bring down your interest rate over the life of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the rate over the term of the loan. You pay more up front, but you'll come out ahead, especially if you don't refinance early.
At Saab Mortgage, we answer questions about this process every day. Call us: 703-288-0777.
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