Getting a Low Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to freeze a specific interest rate and a particular number of points for you for a specified period of time while your application is processed. This ensures that your interest rate cannot rise during the application process.
Although there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. A lender will agree to lock in an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
There are more ways to get a reduced rate, in addition to agreeing to a shorter rate lock period. The larger down payment you can pay, the smaller the interest rate will be, because you will be starting with more equity. You might opt to pay points to improve your rate for the life of the loan, 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 term of the loan. You'll pay more up front, but you will come out ahead in the end.