What is a "rate lock period"?

Locking It In

When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a particular interest rate over a certain number of days while you work on the application process. This saves you from working through your entire application process and finding out at the end that your interest rate has gotten higher.

While there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. The lender will agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to choosing a shorter rate lock period, there are more ways you can score the lowest rate. The more the down payment, the better the interest rate will be, since you will be entering the loan with more equity. You can pay points to bring down your interest rate for the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you will save money, especially if you don't refinance early.

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