Getting a Low Interest Rate
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Locking It In
A rate "lock" or "commitment" is a promise from the lender to freeze a particular interest rate and a specific number of points for you for a specified period during your application process. This saves you from going through your whole application process and discovering at the end that the interest rate has risen higher.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans usually costing more. A lending institution will agree to lock in an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
More Ways to Save on Interest
There are more ways to get a reduced rate, besides choosing a shorter rate lock period. A bigger down payment will result in a lower interest rate, because you are starting out with more equity. You can pay points to reduce your interest rate over the loan term, meaning you pay more initially. For many people, this makes sense and is a good deal..
Funding Resources Mortgage Corp can answer questions about rate lock periods and many others. Give us a call at 888-376-3762.