Getting a Low Interest Rate

Lock It In

A rate "lock" or "commitment" is a promise from the lender to hold a specific interest rate and a specific number of points for you for a specified period while your application is processed. This prevents you from working through your entire application process and discovering at the end that your interest rate has gotten higher.

Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer period usually costing more. A lending institution can agree to lock in an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Ways to Save on Interest

There are other ways to get a reduced rate, in addition to opting for a shorter rate lock period. The more the down payment, the smaller your interest rate will be, because you will have more equity from the beginning. You can pay points to improve your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people 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, especially if you don't refinance early.

Nationwide Home Loans can walk you through the pitfalls of getting a mortgage. Call us: 5626935048.

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