Getting a Low Interest Rate

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Locking It In

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

While there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. You can get a longer period for your lock, but in making this choice, will most likely have a higher interest rate than you would with a shorter rate lock period

Other Interest Saving Strategies

There are other ways to get a reduced rate, besides agreeing to a shorter rate lock period. A bigger down payment will result in a reduced interest rate, since you will be starting out with more equity. You could opt to pay points to reduce your interest rate for the loan term, 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 will pay more initially, but you'll save money, especially if you keep the loan for a long time.

At Fairfax Mortgage Investments, we answer questions about this process every day. Give us a call: 703-385-6122 #236.