A rate "lock" or "commitment" is a promise from the lender to hold a specific interest rate and a specific number of points for you for a certain period of time during your application process. This protects you from going through your whole application process and learning at the end that the interest rate has gotten higher.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones generally costing more. A lending institution will agree to lock in an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
There are more ways to get a good rate, in addition to agreeing to a shorter rate lock period. A bigger down payment will result in a reduced interest rate, since you'll be starting out with more equity. You can pay points to reduce your interest rate over the loan term, meaning you pay more initially. For a lot of people, this makes financial sense..
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.