Getting a Low Interest Rate
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Locking It In
A rate "lock" or "commitment" is a promise from the lender to hold a particular interest rate and a specific number of points for you for a specified period during your application process. This ensures that your interest rate cannot go up while you are going through the application process.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones usually costing more. A lending institution may agree to lock in an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
Other Interest Saving Strategies
In addition to choosing a shorter lock period, there are other ways you may be able to score the lowest rate. A bigger down payment will give you a better interest rate, because you'll have more equity from the beginning. You might choose to pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to improve the rate over the term of the loan. You pay more initially, but you'll save money, especially if you don't refinance early.
At Citywide Home Loans, we answer questions about this process every day. Give us a call at 4808226290.
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