Lock rate now or take a chance?

Question

We are buying a home August 28 and are looking to get our loan commitment. We can do a thirty day lock on Monday but would like to get loan commitment today if possible(we are getting close on that deadline). My husband is worried that if we get commitment today we are stuck with whatever the rates are on Monday when we actually lock the rate. He was wondering if it is possible to do a thirty day lock today and have the loan for a few days before we actually buy the house. I don't think so. Any ideas?

Answer 1

I would lock the rate in now, rather than taking a variable interest rate, unless you can find one with a cap that states the maximum your interest rate can be. Interest rates are not going to go down again, not for a while, so I would take the lowest you can find now. :)

Answer 2

My personal suggestion is like others to lock the rate asap. With the rising interest rates the mortgages are only going to be non affordable for the pricier markets like NY, Washington DC metro and CA areas.

I am personally planning on to buy a house and have locked in a rate of 6.375 on a 5/1 ARM IO loan. When i did the comps for buying a point down, it really didnt work out for me as I dont intend to live in the house for more than 5 years and hence was not a wise decision to do so. Make sure you know for how long are you going to stay in the house before you buy down the point. If your aim is to lower down your monthly payments, then yes its a good idea, but also keep in mind that you will have to shell out that extra money out of your pockets at closing.

Hence here is the mantra for first time home buyers, find the ideal house first, do keep in touch with the lenders and pick the one that gives you the best rate. All lenders will provide you with Good Faith Estimates (GFE's) w/o running your credit. Choose the one that you think is the best and when you are about to finalize the house deal (say around home inspection time) you can choose to lock it down.

A 45 day lock period is also available but it will cost you probably 1/2 a point to do that. Again do the math and decide whats best for ya

Answer 3

If you have documents ready and all papers signed than you can lock in within 24 hours. Some lenders will allow you to lock in online with them. Your Mortgage broker should be able to help you with this. Convential Fannie Mae rate is tied to the 10 year treasury bond so that is what you will look at if rates go up and down. Yet, August 8th is when Bernanke is going to raise rates another .25 point so we be weary. I would say get your documents to your loan officer and lock in.

If you doing 100% financing dont buy down the points. Get into a short term loan 2/27 or 3/27. Closed end 2nd.

If you are putting 20% or more down than yes think about buying down the rate. You can still get under 5% but it will cost you, yet may be worth it in the end.

Contact me if you have additional questions.

Answer 4

whenever you are quoted with the rate, it is "guaranteed" for the thirty days. you have up until the last day to either sign or forget it. you can have the loan for a couple of days before buying the house. although it would be wise of you to get the house first, then get the loan. many instances things don't go according to plan and people who get a loan first, then go looking for the house often have to come back and ask for more money not realizing added costs and such. you have the rate, whichever you were given, for that thirty day period so you can lock it whenever. my advice would be to do it ASAP but there's is no hurry either. depending on whether you are getting a standard 30, 15 or ARM your rate won't necessarily be your be all end all rate. you can always refinance later to get a better rate but the rate nowadays is around 6.5. and it will go up, never goes down.

Answer 5

The factors that exist in the short term tend to push the market up. When I do a loan for a client, I always lock ASAP. Being a broker, if the rates go down later, I can always submit it again elsewhere, and this ability gives me the ability to jawbone the current lender for a better price. But no lock and the rates go up means you get the higher rates. Period.

Relevant article:

http://www.danmelson.com/posts/1147464510.shtml

Answer 6

Lock the rate as soon as possible, contingent upon your being able to close at a lower rate if available, and buy down as far as they'll let you. The cost of buying down is tax deductable as a loan expense, and 1/2% can be as much as $100,000 over the life of the loan.