Getting a Low Interest Rate
Freezing the Rate
A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a particular number of points for you for a specified period of time during your application process. This prevents you from going through your whole application process and learning at the end that the interest rate has gone up.
While there can be a choice of rate lock periods (from 15 to 60 days), the longer ones are generally 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 rate lock span of time
Other Ways to Save on Interest
There are more ways to get a low rate, besides going with a shorter rate lock period. The larger down payment you pay, the better the interest rate will be, because you will be entering the loan with more equity. You can pay points to reduce your rate for the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to reduce the interest rate over the term of the loan. You will pay more initially, but you will come out ahead in the end.
Coastal Mortgage Corp. can answer questions about rate lock periods and many others. Call us: 504-866-5626.
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