"Rate Lock" and other Ways to Get a Lower Interest Rate
Locking It In
A rate "lock" or "commitment" is a promise from the lender to hold a specific interest rate and a certain number of points for you for a certain period of time while your application is processed. This prevents you from going through your whole application process and learning at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer period generally costing more. You can get a longer period for your lock, but in choosing this option, will likely have a higher rate than you would with a shorter period
Additional Ways to Save on Interest
There are other ways to get a good rate, besides agreeing to a shorter rate lock period. A bigger down payment will give you a better interest rate, since you're starting out with more equity. You could opt to pay points to bring down your interest rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to reduce the rate over the term of the loan. You are paying more up front, but you will come out ahead in the end.
American First Bancorp, Inc. can walk you through the pitfalls of getting a mortgage. Call us: 330-492-7757.