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 certain number of points for you for a specified period of time during your application process. This saves you from getting through your entire application process and finding out at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer spans generally costing more. The lender can agree to freeze an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
There are other ways to get a low rate, besides agreeing to a shorter rate lock period. The bigger the down payment, the better your interest rate will be, since you will be entering the loan with more equity. You could opt to pay points to bring down your interest rate over the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you will save money in the end.
Alternative Mortgage Group can answer questions about rate lock periods & many others. Call us at 561-395-4264.