"Rate Lock" and other Ways to Get a Lower Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to set a certain interest rate and a certain number of points for you for a certain period of time while your application is processed. This keeps you from getting through your whole application process and discovering at the end that the interest rate has gotten higher.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans typically costing more. A lending institution can agree to hold an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

More Ways to Save on Interest

In addition to choosing the shorter rate lock period, there are several ways you can get the lowest rate. A bigger down payment will result in a lower interest rate, since you will have a good amount of equity from the beginning. You could choose to pay points to bring down your interest rate for the life of the loan, meaning you pay more up front. For a lot of people, this makes sense and is a good deal..

Absolute Mortgage, a Division of Finance of America Mortgage, LLC can answer questions about rate lock periods and many others. Give us a call at 253-848-1255.

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