"Rate Lock" and other Ways to Get a Lower Interest Rate
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a specific number of points for you for a specified period while your application is processed. This prevents you from getting through your entire application process and finding out at the end that the interest rate has gotten higher.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones typically costing more. The lender can agree to lock in an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Other Interest Saving Strategies
In addition to going with a shorter lock period, there are more ways you can score the best rate. A larger down payment will get you a reduced interest rate, since you'll have more equity from the beginning. You could opt to pay points to reduce your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you'll come out ahead in the long run.