What is a "rate lock period"?

Locking It In

A rate "lock" or "commitment" is a lender's promise to hold a certain interest rate and a specific number of points for you for a specified period of time while your application is processed. This ensures that your interest rate will not get higher while you are going through the application process.

While there are several lengths of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. The lender will agree to hold an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

In addition to opting for a shorter lock period, there are other ways you can get the best rate. A larger down payment will get you a reduced interest rate, since you will have more equity from the beginning. You may opt to pay points to improve your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you will come out ahead in the end.

Family Mortgage Company of Hawaii, Inc. NMLS #244497 can answer questions about rate lock periods & many others. Give us a call: (808) 935-0678.