Getting a Low Interest Rate
Lock It In
A rate "lock" or "commitment" is a lender's promise to set a certain interest rate and a certain number of points for you for a certain period while your application is processed. This means your interest rate won't get higher while you are working through the application process.
Although there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. You can get a longer period for your lock, but in choosing this option, will most likely have a higher interest rate than you would have with a shorter period
Other Interest Saving Strategies
There are other ways to get a good rate, in addition to going with a shorter rate lock period. The bigger the down payment, the smaller your rate will be, because you will have more equity from the beginning. You can pay points to lower your interest rate for the life of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You are paying more initially, but you will come out ahead, especially if you don't refinance early.
At Coastal Mortgage Corp., we answer questions about this process every day. Call us at 504-866-5626.
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