Getting a Low Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to set a specific interest rate and a specific number of points for you for a specified period during your application process. This prevents you from going through your whole application process and discovering at the end that your interest rate has risen higher.

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

More Ways to Get a Great Interest Rate

In addition to going with a shorter rate lock period, there are other ways you are able to get the best rate. A bigger down payment will give you a lower interest rate, since you'll have more equity from the beginning. You can pay points to reduce your rate for the life of the loan, meaning you pay more initially. For a lot of people, this makes sense and is a good deal..

At First Community Bank of Central Al., we answer questions about this process every day. Call us: (334) 285-8850.

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