Change Your Interest Rate

 In Refinancing your Mortgage

Did you know you can change your interest rate for your mortgage, even after you have locked the rate?  When you lock your interest rate, you are actually locking all the rates that are available at that time and you are able to choose a different rate. If you decide to change the rate after it’s locked, here’s what you need to know.

Change Your Interest Rate

When you are buying a house, it’s a good idea to lock your interest rate as soon as you have a signed contract with a seller.  Rates are steadily creeping up these days, and once your rate is locked, you can rest easy knowing the rate can’t go any higher because of changing market conditions.

But let’s say that after you lock the rate, you decide you would really like a lower interest rate.  We can do that for you because you have already locked in all the available rates. A lower rate will cost you more, but it is very often to your advantage to pay some money for a lower rate.  A lower rate will give you a lower monthly payment, and if you intend to keep the house for a long time, the lower rate will end up saving you money (sometimes many thousands of dollars over the life of the loan).  On the flip side, if you choose a higher rate, we will be able to offer you a lender credit, which will be used to pay for some (or all) of your closing costs.

Example Loan

The table below is an example of the different interest rates that might be available for a $325,000 loan, and the points required to get those rates, as well as the lender credits available if you chose a higher rate.  This table is an example only. Rates change every day, and we do not mean to imply that these rates are available now or will be in the future. It is just an example to show you how points and lender credits work.

$325,000 Loan Amount

Interest Rate Principal and Interest Payment Points (as a percentage) Points (dollar amount)
4.250% $1599 4.749 $15,434
4.375% $1623 4.078 $13,254
4.500% $1647 3.396 $11,037
4.625% $1671 2.719 $8,837
4.750% $1695 2.070 $6,728
4.875% $1720 1.479 $4,807
5.000% $1745 1.007 $3,273
5.125% $1770 0.394 $1,280
5.250% $1795 -0.181 -$588
5.375% $1820 -0.684 -$2,223
5.500% $1845 -1.162 -$3,776
5.625% $1871 -1.612 -$5,239
5.750% $1897 -2.069 -$6,724
5.875% $1922 -2.517 -$8,180

The first column shows the interest rates that are available for a $325,000 mortgage.

The second column shows the principal and interest payment at the chosen rate.

The third column shows the amount of points (as a percentage of the loan amount) required to get that rate.  It also shows how much (as a percentage of the loan amount) you would get from us as a lender credit.

The fourth column shows the amount of points (as a dollar amount) required to get that rate, and it also shows how much you would get as a lender credit (as a dollar amount).

If the numbers in the third and fourth columns are positive numbers, you would need to pay that much.  If the numbers in the third and fourth columns are negative numbers, you would get that much from us as a lender credit.

Total Cost Analysis

We have some great software that allows us to compare loan options. Once you lock your interest rate, we can prepare a report for you, called a Total Cost Analysis, that shows:

  • how much it will cost to get a lower rate
  • monthly savings
  • savings over five years
  • savings over the life of the loan

After reviewing the report, all you have to do it tell us if you want to change the rate and we’ll do it for you.

Contact us today if you have any questions about interest rates, points, lender credits, or anything else related to mortgages.  We’re always happy to help!

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