Getting a Low Interest Rate

What is a Rate Lock?

A rate "lock" or "commitment" is a lender's promise to freeze a certain interest rate and a particular number of points for you for a certain period during your application process. This means your interest rate can't get higher while you are working through the application process.

Although there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. The lending institution will agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Other Ways to Save on Interest

In addition to going with the shorter lock period, there are several ways you are able to attain the best rate. A larger down payment will result in a reduced interest rate, since you're starting out with a good deal of equity. You can pay points to reduce your rate for the loan term, 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 up front, but you will save money, especially if you don't refinance early.

American Commerce Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 714-970-9700.

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