Getting a Low Interest Rate

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Locking It In

A rate "lock" or "commitment" is a lender's promise to set a certain interest rate and a specific number of points for you for a specified period during your application process. This ensures that your interest rate cannot get higher while you are working through the application process.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones typically costing more. A lender will agree to lock in an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Additional Ways to Save on Interest

There are more ways to get a low rate, in addition to going with a shorter rate lock period. The bigger the down payment, the lower the rate will be, because you will be starting with more equity. You may opt to pay points to improve your interest rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You pay more initially, but you'll save money, especially if you keep the loan for a long time.

At Glendale Mortgage, we answer questions about this process every day. Call us: 610-853-6500.