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 specified period during your application process. This means your interest rate will not get higher while you are going through the application process.
While there may be a choice of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. A lender will agree to hold an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
In addition to going with the shorter rate lock period, there are other ways you are able to get the best rate. The larger down payment you make, the better your interest rate will be, because you will have more equity from the start. You can pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the term of the loan. You pay more up front, but you'll come out ahead 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.