"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to set a specific interest rate and a particular number of points for you for a certain period during your application process. This means your interest rate will not rise during the application process.
Although there are several lengths of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. A lender can agree to freeze an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are other ways to get a better rate, in addition to opting for a shorter rate lock period. A larger down payment will result in a reduced interest rate, since you'll have a good deal of equity from the beginning. You can pay points to improve your interest rate for the loan term, meaning you pay more initially. For many people, this makes sense and is a good deal..
American First Bancorp, Inc. can answer questions about rate lock periods and many others. Call us at 330-492-7757.