What is a "rate lock period"?
Locking It In
When you are offered a "rate lock" from the 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 won't go up during the application process.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer spans typically costing more. You can get a longer period for your lock, but in choosing this option, will probably have a higher interest rate than you would have with a shorter period
Other Interest Saving Strategies
There are other ways to get a good rate, in addition to choosing a shorter rate lock period. The bigger down payment you can make, the smaller the rate will be, since you will be entering the loan with more equity. You can pay points to lower your interest rate for the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to improve the rate over the life of the loan. You'll pay more up front, but you'll come out ahead in the long run.
At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about this process every day. Give us a call: (808) 935-0678.
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