"Rate Lock" and other Ways to Get a Lower Interest Rate

What is a Rate Lock?

When you're offered a "rate lock" from your lender, it means that you are guaranteed to get a particular interest rate for a determined period while you work on your application process. This ensures that your interest rate will not grow while you are working through the application process.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer period usually costing more. A lender may agree to freeze an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to opting for a shorter lock period, there are several ways you can score the lowest rate. The bigger down payment you can make, the smaller the interest rate will be, since you will have more equity from the start. You may choose to pay points to improve your rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you will come out ahead, especially if you keep the loan for the full term.