I applied for a mortgage today and got a rate of 6.0% if I lock today (I still did not). This is a 30 year/fixed, 20% downpayment and I have to pay down 2.75 points to get this rate. There is no additional fee for it if I lock 30 days out. However, I'm still 50 days out. For 45 days out I have to pay 1/8 of a point and for 60 days out 1/4 of a point. My question is, should I lock now since the rate is good or should I wait and risk an increase in interest rates. Any ideas will be greatly appreciated. Thank you
2007-08-07 09:42:55 · 13 answers · asked by colonk 2 in Business & Finance ➔ Renting & Real Estate
I'd hold off for another week or two.
Right now, anything that isn't A+ paper, meaning Fannie Mae/Freddie Mac or even FHA/VA (since those are guaranteed by the government), is getting wiped out.
There is still a ton of money being invested in bonds. But they are only buying the lowest-risk, highest quality issues. So, US Treasury bonds and the above mortgage bonds have a high level of demand.
High demand pushes rates down, since you can offer a lower rate to someone who really wants to buy it. (And if no one wants to buy your bond, increasing the rate it pays will help get buyers interested).
Within a few weeks, this should settle itself out, to some degree. Meanwhile, first mortgage rates have been dropping incrementally for the past week or so, and we're probably not done yet. Even if it stays the same for 2 weeks, it'll save you .125%.
For what it's worth, those offers you are getting are very fair, based on today's rates. But I gotta ask: How long are you planning to be in this home, or even this loan?
Most loans only last 5-7 years before being paid off through a refinance or sale. It generally takes 5-7 years before you break even on paying points. Has your loan officer shown you the breakeven period? Are you sure you'll end up actually benefitting from paying these points upfront? If your loan officer is having trouble figuring out your breakeven period, I'd consider that a good sign to maybe find a new one.
2007-08-07 10:21:28 · answer #1 · answered by Yanswersmonitorsarenazis 5 · 2⤊ 0⤋
To be totally honest, 2.75 points is high for that rate. There are a lot of factors that determine your interest rate, but a standard 30 year fixed rate with 20% down, good credit, primary residence, and full income documentation is currently priced at 6% costing 1.375% on a 45 day lock. You should be able to get 5.875% or so if you're paying that much.
As far as locking goes, the market is extremely volatile right now - I would recommend locking; but there's no way to tell for sure what the market will do.
2007-08-07 10:00:18 · answer #2 · answered by Mr. Knowitall 3 · 0⤊ 0⤋
Comparison shop.
All things being equal if you are talking about a straightforward conforming loan, then paying 2.75 points for a 6.0% rate is a rip-off. I think you can do better. Do NOT pay any application or lock-in fees either. Plenty of reputable brokers don't charge them.
2007-08-07 13:50:01 · answer #3 · answered by Anonymous · 1⤊ 0⤋
Well the Fed just held the rate as of today. The likelihood of it rising is slim, but whenever you say never, it happens. So I'd say if you the 6% is good for you then lock it in. Now are you sure you can close within that window of time? Because if not, you could lose that rate and you'd have to start over again. So make sure of your dates.
2007-08-07 10:16:37 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Feds left the rate unchanged, but the loan market is falling apart with more companies going out of business or suspending loans, lock in now while you can because it is just going to get worse.
2007-08-07 10:11:37 · answer #5 · answered by Pengy 7 · 0⤊ 0⤋
Too high a price to pay for a rate with your credit scores. It would be best to get a higher rate and use that money instead to apply it directly to principal. Are you sure you're working with a direct lender?
I gave you my contact info in your other question.
2007-08-07 12:05:21 · answer #6 · answered by myrnpr 2 · 0⤊ 0⤋
you could probally find a slightly better rate ince you ar eputting 20% down possible a 5.5 or 5.75% but either way 6 is good, they are only going to get higher so i would say go ahead and lock it in
2007-08-07 09:49:05 · answer #7 · answered by aboryszuk 3 · 0⤊ 0⤋
I frequently spend my half an hour to read this blog's posts daily along with a mug of coffee.
2016-08-24 11:20:39 · answer #8 · answered by annis 4 · 0⤊ 0⤋
yes lock today ASAP other wise you will lose that rate. Today's market is far to unstable for you to float.
2007-08-07 09:54:52 · answer #9 · answered by Anonymous · 0⤊ 0⤋
Yes..but only if it's fixed at 5% for the life of the loan.
2016-05-21 01:07:34 · answer #10 · answered by june 3 · 0⤊ 0⤋