Getting a Low Interest Rate

Locking in your Interest Rate

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 specified period while your application is processed. This keeps you from getting through your entire application process and discovering at the end that your interest rate has risen higher.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones usually costing more. The lender will agree to hold an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.

Other Ways to Save on Interest

There are more ways to get a good rate, besides going with a shorter rate lock period. The larger down payment you pay, the better the rate will be, because you will have more equity from the beginning. You can pay points to bring down your rate over the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You will pay more initially, but you'll save money, especially if you keep the loan for a long time.

At New Millennium Mortgage Co. NMLS: 331173, we answer questions about this process every day. Give us a call at (941) 366-5800.