I'm buying a house and being quoted 5.875% as the rate on a 30 year fixed rate mortgage. Should I lock in?

Question

I'm buying a house. Our lender is quoting us 5.875%, which is a good rate, but it was 5.75% a week ago. We close on Jan 31st. Should I hold off an see if the rate goes lower or lock in now?

Answer 1

Sounds great. I would lock in now.

You might ask for a loan that you can pay half every two weeks. This will take years off of your loan. Check it out.

Answer 2

Hi rlc - I hope you read this today. The mortgage backed bonds are trading higher and pricing is actually better today, Friday the 28th. Talk to your mortgage adviser and ask what his take is on the market. A real loan professional studies the markets and subscribes to services that provide advice on when it is best to float (wait on market changes) and when to lock. But 5.875 sounds like a very competitive rate.

Also, make sure to ask for your Good Faith Estimate and rate lock confirmation. Your GFE should tell you if the rate is costing you anything and your rate lock confirmation is just that, a paper from the lender guaranteeing the rate for a period of time.

Good luck!

Answer 3

Mortgage rates depend on your credit risk. If you look in the papers and see the lower rates they are usually for the best credit scores. They add additional percentages for each line of decrease in your credit score. If you feel that you have a score that should bring in a better interest rate then you should double check with another mortgage company and see what they offer. But remember to go with a mortgage company that is well known, as there have been situations where the lesser known companies have folded and their clients did not find out until they were at the settlement table.

Answer 4

That is a good conforming rate. I would lock it in at that rate. In January there is usually a spike in increased activity as the populace awakens from their holiday slumber, and rates may actually tick up for a short time. You know, the old "supply & demand thing.". If you should wait, think about locking on the middle days of the week. Market fluctuations tend to occur the most on Mondays and Fridays. Several weeks back, uncertainty in the markets caused 4 price changes in one day and many brokers missed a good window at about 6PM. The next day pricing was up again.

Answer 5

alright. that first answer on here confuses me.
for one, if you lock in a rate THAT is the rate you will get if you stick with that lender, bar none- if rates go lower you can not call him up and say "hey i already locked in but rates are lower i want that rate" it is something that is decided between you and your lender when you lock a rate in that you are happy with that and are going to have to live with locking in that rate that day regardless of what the market does. the only way out is to switch lenders- i've never ever in my years of mortgage lending seen a clause where it's a guarantee that if the rate goes up, you still get what you have, (thats normal if you lock) but if it goes down you can have the lower rate.
and 2nd of all your interest rate on your loan isn't written into your realtors purchase and sales agreement.....

WITH that being said. if you can get 5.875 on a purchase lock it in!!! i take it you must have about 20% down. also make sure the lender isn't charging you any points to get down to that rate. and if he is that he is letting you know up front.

if you are being charged that many points you are going to see on paper what the benefit is to you compared to the cost to you to get down to that rate.

good luck on buying the house.

Answer 6

5.875% is a good rate - take it. Rates from day-to-day often bump up & down 0.125 - however, if they start trending upward again, you'll wished you'd locked.

Also, as the first responder answered see if your lender can lock with a "float down option." If rates go down, you can take advantage of it (certain restrictions may apply - so talk to your lender)

Reply to Evensonhimself - I'm surprised you've never heard of a float down option - it's pretty common tool offered by lenders.

Answer 7

usually the lender provides a clause that if the rate goes higher your present number is guaranteed..
or lower..you will get that and for how many days..

you must buy within that time..
or you lose..
when you write the contract..the "realtor" can also put in the lower rate..
good luck

Answer 8

if rates are going back up like they seem to be, you better lock now - 1/10th of a percent isn't going to save you that much

Answer 9

see m2's answer and know that rates traditionally go down before the election but not after! so buy now if you are going to do it!