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

Lock It In

A rate "lock" or "commitment" is a promise from the lender to lock in a certain interest rate and a certain number of points for you for a specified period while your application is processed. This keeps you from getting through your whole application process and discovering at the end that your interest rate has gone up.

Although there can be a choice of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lender may agree to lock in an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.

More Ways to Save on Interest

There are other ways to get a lower rate, in addition to agreeing to a shorter rate lock period. A larger down payment will result in a reduced interest rate, because you are starting out with more equity. You can pay points to lower your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you will come out ahead in the long run.

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