What is a "rate lock period"?

Freezing the Rate

When you're promised a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate over a determined period for the application process. This protects you from working through your entire application process and learning at the end that your interest rate has gotten higher.

Although there might be a choice of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. The lender will agree to lock in an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

More Ways to Save on Interest

There are other ways to get a better rate, besides choosing a shorter rate lock period. The more the down payment, the lower the rate will be, since you will be starting with more equity. You can pay points to improve your rate for the term of the loan, meaning you pay more initially. For many people, this makes financial sense..

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.