Getting a Low Interest Rate
Freezing the Rate
A rate "lock" or "commitment" is a promise from the lender to set a specific interest rate and a specific number of points for you for a certain period while your application is processed. This means your interest rate will not get higher during the application process.
Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer ones usually costing more. You can get a longer period for your lock, but in making this choice, will probably have a higher rate than you would with a shorter period
Other Interest Saving Strategies
In addition to choosing the shorter rate lock period, there are more ways you can score the lowest rate. The bigger down payment you can make, the better the interest rate will be, since you will have more equity from the beginning. You can pay points to lower your interest rate over the life of the loan, 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 term of the loan. You'll pay more initially, but you'll save money in the long run.
At Contemporary Mortgage Services, Inc, we answer questions about this process every day. Give us a call at 407-834-3377.
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