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

Locking in your Interest Rate

A rate "lock" or "commitment" is a lender's promise to lock in a certain interest rate and a certain number of points for you for a certain period of time during your application process. This means your interest rate will not grow during the application process.

While there might be a choice of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. A lending institution may agree to hold an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Save on Interest

In addition to choosing the shorter lock period, there are several ways you can score the best rate. A bigger down payment will result in a reduced interest rate, since you'll have a good amount of equity at the start. You might choose to pay points to bring down your rate for the term 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 will pay more up front, but you will save money, especially if you keep the loan for a long time.

At Amity Mortgage LLC, we answer questions about this process every day. Give us a call: (203) 729-6681.

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