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"Rate Lock" and other Ways to Get a Lower Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to hold a particular interest rate and a certain number of points for you for a certain period of time while your application is processed. This ensures that your interest rate can't grow while you are going through the application process.

Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer period typically costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher rate than you would have with a shorter period

More Ways to Get a Great Interest Rate

There are more ways to get a good rate, in addition to choosing a shorter rate lock period. A larger down payment will result in a better interest rate, because you will be starting out with a good deal of equity. You may choose to pay points to lower your rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to reduce the rate over the term of the loan. You will pay more up front, but you will come out ahead in the long run.

Commonwealth Mortgage & Investments, Inc. can answer questions about rate lock periods and many others. Call us at 804-768-9519.