A rate "lock" or "commitment" is a lender's promise to hold a particular interest rate and a particular number of points for you for a certain period of time while your application is processed. This ensures that your interest rate can't rise while you are working through the application process.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones generally costing more. The lender will agree to hold an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.
There are other ways to get a lower rate, in addition to agreeing to a shorter rate lock period. The bigger down payment you can pay, the better your interest rate will be, since you will be starting with more equity. You could choose to pay points to lower your 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 life of the loan. You are paying more initially, but you will save money in the end.
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.