Getting a Low Interest Rate

Locking It In

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 while your application is processed. This means your interest rate cannot grow as you are going through the application process.

Although there may be a choice of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. A lender can agree to lock in an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Other Interest Saving Strategies

In addition to going with the shorter lock period, there are several ways you are able to score the lowest rate. The bigger the down payment, the lower your interest rate will be, since you will have more equity from the beginning. You can pay points to improve your rate for 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 bring the rate down over the term of the loan. You'll pay more initially, but you will save money, especially if you don't refinance early.

Norcal Capital Group, Inc can answer questions about rate lock periods & many others. Give us a call: (650) 689-5684.

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