Getting a Low Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to lock in a certain interest rate and a particular number of points for you for a certain period of time during your application process. This protects you from working 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 most likely have a higher rate than you would with a shorter rate lock period

More Ways to Save on Interest

There are more ways to get a good rate, besides agreeing to a shorter rate lock period. The larger down payment you can make, the better your interest rate will be, as you will be entering the loan with more equity. You can pay points to bring down your rate for the life of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the interest rate over the term of the loan. You'll pay more up front, but you'll come out ahead, especially if you keep the loan for a long time.

James M. Dix can walk you through the pitfalls of getting a mortgage. Call us at (317) 288-9434.

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