"Rate Lock" and other Ways to Get a Lower Interest Rate

Locking in your Interest Rate

A rate "lock" or "commitment" is a lender's promise to set a certain interest rate and a particular number of points for you for a certain period of time during your application process. This ensures that your interest rate won't grow during the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are usually more expensive. The lending institution may agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

Other Interest Saving Strategies

There are more ways to get a low rate, besides agreeing to a shorter rate lock period. The larger down payment you make, the lower your rate will be, as you will be entering the loan with more equity. You might choose to pay points to improve your interest rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the term of the loan. You'll pay more up front, but you will save money, especially if you keep the loan for a long time.