Getting a Low Interest Rate
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Locking in your Interest Rate
A rate "lock" or "commitment" is a lender's promise to freeze a certain interest rate and a certain number of points for you for a specified period during your application process. This keeps you from getting through your whole application process and finding out at the end that the interest rate has gone up.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer spans usually costing more. The lending institution will agree to hold an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
Other Interest Saving Strategies
In addition to going with a shorter lock period, there are several ways you can score the best rate. The larger the down payment, the better your interest rate will be, since you will have more equity from the start. You may choose to pay points to lower your interest rate for the loan term, meaning you pay more initially. For many people, this makes financial sense..
Paragon Mortgage Services, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call: 303.727.2466.