“Rate Lock” and other Ways to Get a Lower Interest Rate
Locking in your Interest Rate
A rate “lock” or “commitment” is a promise from the lender to set a certain interest rate and a specific number of points for you for a certain period while your application is processed. This keeps you from going through your whole application process and discovering 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 typically costing more. You can get a longer period for your lock, but in choosing this option, will probably have a higher interest rate than you would with a shorter rate lock period
More Ways to Get a Great Interest Rate
In addition to choosing the shorter rate lock period, there are more ways you can attain the lowest rate. The more the down payment, the smaller the interest rate will be, since you will be starting with more equity. You might opt to pay points to reduce your rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to improve the rate over the life of the loan. You pay more up front, but you will save money in the end.