Getting a Low Interest Rate

Locking in your Interest Rate

A rate "lock" or "commitment" is a promise from the lender to set a specific interest rate and a particular number of points for you for a certain period of time while your application is processed. This means your interest rate will not get higher as you are going through the application process.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer ones generally costing more. The lender can agree to freeze 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.

Other Interest Saving Strategies

There are more ways to get a lower rate, in addition to opting for a shorter rate lock period. The larger the down payment, the lower your rate will be, since you will be starting 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 many people is to pay points to improve the rate over the term of the loan. You'll pay more initially, but you'll come out ahead, 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.