Lock It In
When you’re promised a “rate lock” from the lender, it means that you are guaranteed to keep a specific interest rate over a determined period while you work on the application process. This protects you from getting through your entire application process and discovering at the end that your interest rate has gone up.
Although there may be a choice of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. The lender may agree to lock in an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
Other Interest Saving Strategies
There are other ways to get a good rate, besides agreeing to a shorter rate lock period. The more the down payment, the smaller your interest rate will be, as you will have more equity from the beginning. You can pay points to improve your rate for the life of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to improve the interest rate over the life of the loan. You’ll pay more initially, but you will come out ahead, especially if you don’t refinance early.