"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking It In
A rate "lock" or "commitment" is a promise from the lender to set a particular interest rate and a certain number of points for you for a certain period of time while your application is processed. This protects you from going through your entire application process and finding out at the end that your interest rate has gone up.
Although there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. A lender may agree to freeze an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more 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 better rate, in addition to agreeing to a shorter rate lock period. The more the down payment, the better the rate will be, because you will be entering the loan with more equity. You can pay points to bring down your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You will pay more initially, but you will save money, especially if you keep the loan for a long time.
Coastal Mortgage Corp. can answer questions about rate lock periods and many others. Give us a call: 504-866-5626.
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