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New build. House will be finished in April. I can lock in up to 6 months prior (4.1%). Cost if I lock in now would be 8k to hold the rate. Fed rumblings say hike in december, maybe.
Or... do I let it ride and let the chips fall where they may come April?
what is the 8K to your overall costs in percentage. if you are building a million dollar home 8k is nothing. if you are building a 60k dollar home 8k is huge.
I would say lock it. but the majority of mortgage professionals believe they will either drop or stay the same. To me its not worth the risk but it depend on what the 8k means to you..
New build. House will be finished in April. I can lock in up to 6 months prior (4.1%). Cost if I lock in now would be 8k to hold the rate. Fed rumblings say hike in december, maybe.
Or... do I let it ride and let the chips fall where they may come April?
Think how rich I'd be if I could actually answer your question, wow.
If you don't lock now, and the market ticks up, you should get a heads-up from your lender, and could lock then, perhaps more cheaply because it would cover less Lock time. If you want more peace of mind - - Maybe get the free trial for Mortgage Market guide, then their lowest-level membership that offers Rate Alerts? MMG - Free Membership Registration (I am not affiliated with this company but have used them for many years)
For me, it comes down to: what is going to happen to you (and your spouse) between now and the time you lock? Sleepless nights, hand-wringing over the Holidays, (IMO) mis-perceiving an eighth-point uptick as the end of the world when you could/should be focused on the cost of other debts, etc? Personally, I wouldn't lock now, because I don't stress out over the undulation of the market, and mortgage interest rates are less important to me than other components of my financial life.
I would monitor the market, use MMG, and lock if/when there actually is a pending uptick in pricing.
I would watch the market before spending 8K, even if TH Fed bumps rates in December (I should have said especially if they bump rates, it's already priced into today's rates). I believe this is month 58 or 59 in a row, we've heard about rising rate warnings.
Are you so close to qualifying, you would lose the home for qualifying? If you paid $8,000 today in points on your chosen loan program, how much would it lower the rate? The more time that passes, the shorter your lock. So, in January, you can get a 120 day lock for 6K. Or, say rates go up 1/4% and $8000 will buy the rate down to where they are now. Each passing day can be your friend, as well as, your enemy.
Whatever you do, do not get in the position of an expired lock. So, what does the typical buyer do? They try to put the builder in a box, asking them when can you lock in? When will the house be ready? To which they reply, "we can give you an idea, but our contract CLEARLY states we are not responsible for any expired locks." And the buyer says, " sure, sure, we get it.". So who do you think is the first one screaming bloody murder when the buyer winds up having to purchase an extension? Whatever they tell you, add two weeks. Walk the neighborhood if he's building multiple homes and quiz earlier buyers. Do they deliver on time? Because, at the end of the day, it's all on you.
All that said, peace of mind and a good night's sleep can be quite valuable. I know many that would happily pay 8 grand to make their problems go away. You really can't put a price on peace of mind...but don't do it because someone is fanning the flames. Do you get a float-down?
New build. House will be finished in April. I can lock in up to 6 months prior (4.1%). Cost if I lock in now would be 8k to hold the rate. Fed rumblings say hike in december, maybe.
Or... do I let it ride and let the chips fall where they may come April?
Most industry analysts anticipate rates to continue their "sideways" movement A tight trading pattern in the MBS markets. Do some math. Calculate your payment based on what you think the worst case scenario might be, rate wise. Then subtract the difference in payments ( 4.1 vs say 4.75 ) use the difference per month to divide into 8000. That will give the amount of time it will hake to recoup your cost for the extended lock. Other factors to consider include how long you anticipate being in the home, the likelihood of the builder finishing on time and in this ever changing regulatory environment, the ability of the lender to meet the projected closing date. Also ask if you have the option of extending your rate lock if necessary. Most lenders will allow up to 2 extensions, but you will be charged for the extension(s). I am assuming you are applying for a conventional loan.
New build. House will be finished in April. I can lock in up to 6 months prior (4.1%). Cost if I lock in now would be 8k to hold the rate. Fed rumblings say hike in december, maybe.
Or... do I let it ride and let the chips fall where they may come April?
Fed rumblings say hike in December; Dito....
My view - interest rates have been low for a really long time. History shows rates do not move (much) during election years. If rates did republicans would blame the democratics and vice versus.
"Rumblings Brewing In The Pot" - Donald Trump the next President, on a republican ticket, new business, new jobs, more money in the market = interest rate hike to control inflation......
History also shows when interest rates go up, property values raise...
My $00.02
Last edited by Modification Specialist; 12-03-2015 at 10:14 AM..
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