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

Freezing the Rate

When you are offered a "rate lock" from your lender, it means that you are guaranteed to keep a specific interest rate over a certain number of days for the application process. This ensures that your interest rate cannot get higher as you are working through the application process.

Rate lock periods can vary in length, between 15 to 60 days, with the longer period typically costing more. A lender may agree to freeze an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

There are more ways to get a better rate, besides agreeing to a shorter rate lock period. The bigger down payment you pay, the lower the rate will be, since you will have more equity from the beginning. You could opt to pay points to lower your rate over the life of the loan, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to improve the rate over the term of the loan. You pay more initially, but you'll come out ahead, especially if you keep the loan for a long time.

At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about this process every day. Give us a call at (808) 935-0678.