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 certain period of time while your application is processed. This ensures that your interest rate cannot grow as you are working through the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans usually costing more. A lending institution will agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
There are more ways to get a good rate, in addition to choosing a shorter rate lock period. A larger down payment will result in a better interest rate, because you will be starting out with more equity. You can pay points to bring down your interest rate for the loan term, meaning you pay more initially. For many people, this makes sense and is a good deal..
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.