Getting a Low Interest Rate

Lock It In

A rate "lock" or "commitment" is a lender's promise to lock in a certain interest rate and a specific number of points for you for a specified period of time while your application is processed. This saves you from working through your entire application process and discovering at the end that the interest rate has gotten higher.

Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer period typically costing more. A lending institution may agree to freeze an interest rate and points for a longer span of time, such as sixty 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 other ways to get a good rate, besides opting for a shorter rate lock period. A larger down payment will get you a lower interest rate, because you're starting out with more equity. You can pay points to reduce your interest rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the term of the loan. You'll pay more up front, but you will come out ahead in the end.