A rate "lock" or "commitment" is a promise from the lender to freeze a particular interest rate and a particular number of points for you for a specified period of time during your application process. This protects you from going through your whole application process and learning at the end that the interest rate has gone up.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer ones generally costing more. A lending institution will agree to freeze an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
There are other ways to get a reduced rate, besides opting for a shorter rate lock period. A larger down payment will get you a reduced interest rate, because you'll have more equity from the beginning. You may opt to pay points to bring down your rate for the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You are paying more initially, but you'll save money in the long run.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.