Getting a Low Interest Rate

Lock It In

A rate "lock" or "commitment" is a promise from the lender to hold 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 getting through your entire application process and learning at the end that your interest rate has gone up.

Rate lock periods can vary in length, between 15 to 60 days, with the longer ones usually costing more. You can get a longer period for your lock, but in making this choice, will probably have a higher rate than you would with a shorter rate lock span of time

Other Interest Saving Strategies

There are other ways to get a low rate, besides going with a shorter rate lock period. The larger down payment you can pay, the smaller the interest rate will be, since you will have more equity from the start. You can pay points to improve your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You pay more up front, but you'll save money, especially if you keep the loan for the full term.

At Alerus Mortgage, we answer questions about this process every day. Call us at 952 417 8481.

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