Getting a Low Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a lender's promise to hold a certain interest rate and a specific number of points for you for a certain period during your application process. This prevents you from going through your entire application process and finding out at the end that your interest rate has gone up.

Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer ones usually costing more. You can get a longer period for your lock, but in doing so, will probably have a higher interest rate than you would have with a shorter period

Other 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 pay, the better your rate will be, because you will be entering the loan with more equity. You may opt to pay points to bring down your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you will come out ahead in the long run.

James M. Dix can answer questions about rate lock periods and many others. Give us a call: (317) 288-9434.

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