Getting a Low Interest Rate

Freezing the Rate

A rate "lock" or "commitment" is a lender's promise to lock in a specific interest rate and a certain number of points for you for a specified period of time during your application process. This means your interest rate can't get higher as you are going through the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are usually more expensive. The lending institution can agree to hold an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Other Interest Saving Strategies

There are other ways to get a reduced rate, in addition to going with a shorter rate lock period. The larger down payment you can pay, the lower the interest rate will be, as you will be starting with more equity. You can pay points to improve your rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to reduce the rate over the term of the loan. You'll pay more initially, but you'll save money, especially if you don't refinance early.

Family Mortgage Company of Hawaii, Inc. NMLS #244497 can walk you through the pitfalls of getting a mortgage. Call us: (808) 935-0678.

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