Getting a Low Interest Rate

Locking It In

When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate over a determined period for your application process. This means your interest rate will not rise as you are working through the application process.

Rate lock periods can vary in length, between 15 to 60 days, with the longer period usually costing more. A lending institution may agree to freeze an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Additional Ways to Save on Interest

In addition to choosing a shorter lock period, there are several ways you are able to score the best rate. A bigger down payment will get you a better interest rate, since you're starting out with more equity. You might opt to pay points to bring down your 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 up front, but you'll come out ahead, especially if you keep the loan for the full term.

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