"Rate Lock" and other Ways to Get a Lower Interest Rate
Lock It In
A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a certain number of points for you for a certain period while your application is processed. This prevents you from working through your entire application process and discovering at the end that the interest rate has gotten higher.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones usually costing more. The lending institution may agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are more ways to get a lower rate, besides agreeing to a shorter rate lock period. A bigger down payment will get you a reduced interest rate, because you'll be starting out with a good deal of equity. You might choose to pay points to reduce your rate over the term of the loan, meaning you pay more initially. To a lot of people, this is a good option..
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.