Getting a Low Interest Rate
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What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to freeze a specific interest rate and a particular number of points for you for a specified period during your application process. This saves you from working through your entire application process and discovering at the end that the interest rate has gone up.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer period usually costing more. A lending institution will agree to hold an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.
Other Interest Saving Strategies
There are other ways to get a good rate, in addition to choosing a shorter rate lock period. The bigger the down payment, the lower your rate will be, as you will be starting with more equity. You could opt to pay points to improve your interest rate for the term of the loan, meaning you pay more up front. For a lot of people, this makes sense and is a good deal.
At Enotiva Lending Solutions Inc, we answer questions about this process every day. Call us: 407-496-3555.