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

What is a Rate Lock?

A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a particular number of points for you for a certain period of time during your application process. This means your interest rate can't go up during the application process.

Although there may be a choice of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. A lending institution will agree to freeze an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Other Interest Saving Strategies

In addition to choosing a shorter lock period, there are several ways you can get the best rate. A bigger down payment will give you a lower interest rate, since you will have more equity from the beginning. You can pay points to lower your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you'll save money in the long run.