Getting a Low Interest Rate
Locking It In
A rate "lock" or "commitment" is a promise from the lender to freeze a certain interest rate and a specific number of points for you for a certain period of time during your application process. This saves you from working through your whole application process and learning at the end that your interest rate has gone up.
Rate lock periods can vary in length, between 15 to 60 days, with the longer period usually costing more. A lending institution can agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are other ways to get a lower rate, in addition to choosing a shorter rate lock period. The bigger down payment you can pay, the smaller your rate will be, since you will be entering the loan with more equity. You might choose to pay points to improve your interest 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 term of the loan. You will pay more up front, but you'll save money in the long run.
Coastal Mortgage Corp. can answer questions about rate lock periods and many others. Give us a call: 504-866-5626.
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