A rate lock or a rate commitment is a lender’s promise to hold a certain interest rate and a certain number of points for you for a specified period of time while your application is processed. This prevents you from going through your whole application process and at the end of it finding out the interest rate has gone up.
A rate lock period can vary in length, and longer ones usually cost more. A lender will agree to “hold” your interest rate and points for a longer period, say 60 days, but in exchange the rate and maybe points are higher than with a shorter rate lock period, for example 30 to 45 days.
A larger down payment will result in a lower interest rate than a smaller one, because you’re starting out with more equity. Or you can pay points to lower your rate over the life of the loan. For many people, this makes sense and is a good deal.
Closing costs are fees paid to obtain financing onyour home. You will obtain a Good Faith Estimate of closing costs when you sign application. Closing costs are usually paid the day you close on your home. Often when you refinance a loan, there may be the option to include your closing costs into the loan amount. However, paying closing costs when the loan closes will reduce your interest rate.
Finally, the interest rate a lender is willing to offer you depends on your credit score and your income-to-debt ratio. If you have good credit and your income far exceeds your debt obligations, you will qualify for a lower rate.