"Rate Lock" and other Ways to Get a Lower Interest Rate
Freezing the Rate
A rate "lock" or "commitment" is a promise from the lender to lock in a particular interest rate and a particular number of points for you for a specified period of time during your application process. This keeps you from going through your entire application process and discovering at the end that your interest rate has gotten higher.
While there can be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. A lender may agree to freeze an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
Other Interest Saving Strategies
There are other ways to get a better rate, besides opting for a shorter rate lock period. A bigger down payment will get you a better interest rate, because you're starting out with more equity. You may choose to pay points to improve your rate for the life of the loan, meaning you pay more initially. To many people, this makes sense and is a good deal..
Family Mortgage Company of Hawaii, Inc. NMLS #244497 can walk you through the pitfalls of getting a mortgage. Give us a call at (808) 935-0678.
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