Getting a Low Interest Rate

Locking It In

A rate "lock" or "commitment" is a promise from the lender to freeze a particular interest rate and a certain number of points for you for a specified period of time during your application process. This ensures that your interest rate cannot get higher during the application process.

While there might be a choice of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. A lending institution can agree to lock in an interest rate and points for a longer span of time, like sixty 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

In addition to opting for a shorter lock period, there are other ways you are able to score the best rate. The larger the down payment, the smaller your interest rate will be, since you will have more equity from the start. You might opt to pay points to reduce your interest rate over the life of the loan, meaning you pay more initially. 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 a long time.

Family Mortgage Company of Hawaii, Inc. NMLS #244497 can answer questions about rate lock periods & many others. Give us a call: (808) 935-0678.

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