Getting a Low Interest Rate

What is a Rate Lock?

A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a specific number of points for you for a certain period of time during your application process. This keeps you from getting through your entire application process and discovering at the end that your interest rate has gotten higher.

While there may be a choice of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lending institution will agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to going with the shorter rate lock period, there are more ways you may be able to attain the lowest rate. The bigger the down payment, the better your interest rate will be, since you will have more equity from the start. You can pay points to bring down your rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you will come out ahead, especially if you keep the loan for a long time.

Atlantic Financial Services can answer questions about rate lock periods and many others. Give us a call: (732) 969-9300.

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