Getting a Low Interest Rate
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Freezing the Rate
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 means your interest rate will not rise as you are working through the application process.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans usually costing more. A lender can agree to hold an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
Other Interest Saving Strategies
There are other ways to get a lower rate, in addition to choosing a shorter rate lock period. The larger down payment you can make, the smaller your rate will be, as you will be entering the loan with more equity. You can pay points to reduce your interest rate for the life of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to reduce the interest rate over the term of the loan. You'll pay more initially, but you'll come out ahead, especially if you keep the loan for the full term.
First Source Capital Mortgage, Inc. can walk you through the pitfalls of getting a mortgage. Call us at 903-482-1123.