Getting a Low Interest Rate

Locking in your Interest Rate

A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a specific number of points for you for a certain period of time while your application is processed. This saves you from going through your whole application process and finding out at the end that your interest rate has gone up.

Although there are several lengths of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. The lending institution may agree to freeze an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

There are more ways to get a lower rate, besides going with a shorter rate lock period. A bigger down payment will get you a better interest rate, because you will have a good amount of equity at the start. You can pay points to bring down your interest rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you'll save money in the long run.

Farm Credit of the Virginias can answer questions about rate lock periods & many others. Give us a call: (800) 919-3276.