Getting a Low Interest Rate

Locking It In

A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a certain number of points for you for a specified period of time while your application is processed. This means your interest rate can't rise while you are going through the application process.

Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer spans typically costing more. A lending institution can 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 more than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

There are more ways to get a better rate, in addition to opting for a shorter rate lock period. A bigger down payment will get you a better interest rate, since you'll be starting out with more equity. You can pay points to lower your interest rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you'll come out ahead in the long run.

Boardwalk Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 1-800-606-2794.