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

What is a Rate Lock?

When you are promised a "rate lock" from your lender, it means that you are guaranteed to keep a set interest rate over a determined period while you work on the application process. This means your interest rate cannot get higher during the application process.

Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer ones typically costing more. A lender will agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Additional Ways to Save on Interest

There are other ways to get a lower rate, in addition to going with a shorter rate lock period. The more the down payment, the lower the interest rate will be, because you will be entering the loan with more equity. You can pay points to lower your rate over the term of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to improve the rate over the term of the loan. You'll pay more up front, but you'll save money in the end.