Getting a Low Interest Rate

Locking It In

A rate "lock" or "commitment" is a lender's promise to lock in a particular interest rate and a certain number of points for you for a certain period of time during your application process. This protects you from going through your entire application process and finding out at the end that the interest rate has risen higher.

Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer ones typically costing more. A lending institution will agree to freeze an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

Additional Ways to Save on Interest

There are more ways to get a low rate, in addition to going with a shorter rate lock period. A bigger down payment will result in a lower interest rate, since you are starting out with more equity. You might opt to pay points to bring down your rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you will save money, especially if you don't refinance early.