Getting a Low Interest Rate

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Freezing the Rate

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 specified period while your application is processed. This saves you from getting through your entire application process and learning at the end that the interest rate has risen higher.

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 rate than you would with a shorter period

Additional Ways to Save on Interest

There are more ways to get a reduced rate, in addition to opting for a shorter rate lock period. The larger down payment you can pay, the better your interest rate will be, as you will be starting with more equity. You may choose to pay points to reduce your rate over the life of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to reduce the interest rate over the term of the loan. You will pay more up front, but you'll come out ahead in the long run.

At PFS Funding, we answer questions about this process every day. Give us a call: (925) 560-7644.

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