Getting a Low Interest Rate

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What is a Rate Lock?

A rate "lock" or "commitment" is a lender's promise to lock in a particular interest rate and a particular number of points for you for a certain period while your application is processed. This prevents you from going through your entire application process and learning at the end that the interest rate has gotten higher.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer period usually costing more. The lender can agree to freeze an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

More Ways to Save on Interest

There are more ways to get a low rate, in addition to choosing a shorter rate lock period. The bigger the down payment, the lower your rate will be, because you will have more equity from the start. You can pay points to lower your interest rate over the term of the loan, 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 life of the loan. You will pay more up front, but you will save money, especially if you keep the loan for the full term.