Getting a Low Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to hold a particular interest rate and a particular number of points for you for a certain period during your application process. This protects you from working through your whole application process and learning at the end that the interest rate has risen higher.
While there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. A lending institution can agree to hold an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to opting for a shorter lock period, there are more ways you can get the best rate. A bigger down payment will result in a reduced interest rate, because you'll be starting out with a good deal of equity. You might opt to pay points to reduce your interest rate over the life of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to improve the interest rate over the life of the loan. You'll pay more up front, but you'll come out ahead, especially if you don't refinance early.