Getting a Low Interest Rate

Freezing the Rate

When you're offered a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate for a certain number of days for the application process. This prevents you from going through your whole application process and discovering at the end that the interest rate has gone up.

Although there may be a choice of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. The lending institution will agree to freeze an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to opting for the shorter rate lock period, there are other ways you are able to get the lowest rate. A bigger down payment will result in a better interest rate, since you are starting out with a good deal of equity. You could choose to pay points to improve your interest rate over the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You are paying more up front, but you will 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. Give us a call: (808) 935-0678.

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