A rate "lock" or "commitment" is a lender's promise to set a specific interest rate and a particular number of points for you for a specified period while your application is processed. This ensures that your interest rate cannot get higher during the application process.
Rate lock periods can vary in length, between 15 to 60 days, with the longer spans typically costing more. You can get a longer period for your lock, but in choosing this option, will most likely have a higher interest rate than you would with a shorter rate lock period
There are other ways to get a low rate, besides opting for a shorter rate lock period. The larger the down payment, the better your interest rate will be, as you will have more equity from the beginning. You can pay points to improve your rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to reduce the interest rate over the life of the loan. You will pay more initially, but you'll save money 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.