Getting a Low Interest Rate
Locking in your Interest Rate
A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a specific number of points for you for a specified period of time while your application is processed. This means your interest rate won't get higher during the application process.
Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer spans generally costing more. A lending institution can agree to lock in an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
More Ways to Save on Interest
In addition to opting for a shorter rate lock period, there are several ways you can get the lowest rate. The larger the down payment, the better your interest rate will be, because you will have more equity from the beginning. You might opt to pay points to reduce your rate for the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to improve the interest rate over the life of the loan. You will pay more initially, 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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