Getting a Low Interest Rate
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Freezing the Rate
A rate "lock" or "commitment" is a lender's promise to freeze a certain interest rate and a certain number of points for you for a specified period during your application process. This saves you from working through your whole application process and discovering at the end that your interest rate has risen higher.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones generally costing more. A lender will agree to hold 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 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 good rate, in addition to choosing a shorter rate lock period. The bigger down payment you can make, the better the rate will be, because you will have more equity from the beginning. You may choose to pay points to bring down your rate over the life of the loan, meaning you pay more up front. To many people, this is a good option.
At Mortgage Direct Inc., we answer questions about this process every day. Call us at 1-844-MBROKER (1-844-627-6537).