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

What is a Rate Lock?

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

Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer spans usually costing more. You can get a longer period for your lock, but in choosing this option, will likely have a higher interest rate than you would have with a shorter rate lock span of time

Additional Ways to Save on Interest

There are other ways to get a reduced rate, in addition to going with a shorter rate lock period. A bigger down payment will result in a reduced interest rate, because you'll have a good deal of equity at the start. You may opt to pay points to lower your interest rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to improve the interest rate over the life of the loan. You'll pay more up front, but you will save money, especially if you don't refinance early.

First Community Bank of Central Al. can answer questions about rate lock periods & many others. Give us a call: (334) 285-8850.

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