Getting a Low Interest Rate
Freezing the Rate
A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a particular number of points for you for a specified period during your application process. This ensures that your interest rate won't rise during the application process.
Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer ones usually costing more. A lending institution will agree to freeze an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
More Ways to Save on Interest
There are more ways to get a good rate, in addition to choosing a shorter rate lock period. A larger down payment will result in a better interest rate, since you'll be starting out with more equity. You might choose to pay points to lower your rate for the life of the loan, meaning you pay more initially. For many people, this makes sense and is a good deal..
At New Millennium Mortgage Co. NMLS: 331173, we answer questions about this process every day. Give us a call: (941) 366-5800.
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