"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a promise from the lender to set a particular interest rate and a particular number of points for you for a certain period while your application is processed. This ensures that your interest rate will not grow during the application process.
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 period, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Other Ways to Save on Interest
There are other ways to get a low rate, in addition to opting for a shorter rate lock period. The larger the down payment, the lower the interest rate will be, because you will be entering the loan with more equity. You may choose to pay points to improve your rate for the term of the loan, meaning you pay more up front. For many people, this makes sense and is a good deal..
Contemporary Mortgage Services, Inc can answer questions about rate lock periods & many others. Give us a call: 407-834-3377.
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