Getting a Low Interest Rate
Locking It In
A rate "lock" or "commitment" is a lender's promise to freeze a certain interest rate and a certain number of points for you for a specified period while your application is processed. This protects you from getting through your entire application process and learning at the end that your interest rate has risen higher.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans generally costing more. A lending institution may agree to freeze 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 fewer days.
More Ways to Get a Great Interest Rate
There are other ways to get a better rate, in addition to agreeing to a shorter rate lock period. A larger down payment will give you a lower interest rate, since you will have more equity from the beginning. You may choose to pay points to reduce your rate over the loan term, meaning you pay more initially. For a lot of people, this is a good option..
Prime Capital Mortgage Corp can walk you through the pitfalls of getting a mortgage. Call us: 248-644-1200.
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