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Old 11-26-2008, 04:06 PM
 
222 posts, read 802,684 times
Reputation: 65

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What are your thoughts on the interest rate trend. We are looking for a house but haven't found one yet. There is a bank in our area that does a 60 day lock, shop and roll. We can lock in now and look for a home with the interest rates now. We have the option to purchase a 1 time float down to relock at a better rate if it comes up during that time (up until 5 days before closing). The cost is almost $1000 (.375% of the purchase). I think the rate is really low but the dilema comes with "what if". What if we find a home and start the paperwork to close and it happens to be during the time of the presidency switch. Everything is so unstable and I am not convinced that it won't go lower. I would still be able to lock one time lower (for that fee) if they went down during that time. If they don't go lower, it is non refundable. Anyone have a crystal ball they could lend me?
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Old 11-26-2008, 05:19 PM
 
28,449 posts, read 72,803,430 times
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If times were different I'd say FIND ANOTHER LENDER, but that has gotten much tougher...

Still, how many lenders are active in your area? Once upon time float down was free! To my mind .375 seems practically like usury -- after all the floated down rate is what they'd be offering to every other shmoe who walked in off the street IF the rates do in fact drop, and if they do not then they're just lining their pockets...

Take a look at the major sites that track rates & opninions -- there is just not very much liklihood rates are going anywhere:

Mortgage Rate Trend Survey ~ Will Mortgage Rates Rise or Fall?
Graph the Trend from bankrate.com (tm):

Spend some more time talking to lenders, business is dead slow. They ought to have nothing but polite things to say to a first time home buyer, assuming you have good credit and adequate down payment.

Good Luck!
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Old 11-29-2008, 11:18 AM
 
Location: MID ATLANTIC
7,851 posts, read 19,199,975 times
Reputation: 8671
Quote:
Originally Posted by Bridget View Post
What are your thoughts on the interest rate trend. We are looking for a house but haven't found one yet. There is a bank in our area that does a 60 day lock, shop and roll. We can lock in now and look for a home with the interest rates now. We have the option to purchase a 1 time float down to relock at a better rate if it comes up during that time (up until 5 days before closing). The cost is almost $1000 (.375% of the purchase). I think the rate is really low but the dilema comes with "what if". What if we find a home and start the paperwork to close and it happens to be during the time of the presidency switch. Everything is so unstable and I am not convinced that it won't go lower. I would still be able to lock one time lower (for that fee) if they went down during that time. If they don't go lower, it is non refundable. Anyone have a crystal ball they could lend me?

This is such a bad idea, unless you are the loan officer or the lender. I can come up w/ comment after comment on why, but you really answered the crux of the matter with your own words, "what if?"

I am willing to bet you didn't ask to see a copy of the "lock w/ float down" agreement before posting this question. Request that and I am willing to bet most of my reasons for negative comments will be within that document.
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Old 11-29-2008, 12:45 PM
 
Location: Boca Raton, FL
5,418 posts, read 8,959,289 times
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Smile Rate roll down

If they are offering 5.250% at this point, take it.
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Old 11-29-2008, 02:08 PM
 
Location: MID ATLANTIC
7,851 posts, read 19,199,975 times
Reputation: 8671
Quote:
Originally Posted by Bette View Post
If they are offering 5.250% at this point, take it.
That's rather loose with the advice and could prove to be very costly advice. I sincerely hope you meant well as opposed to being flip. But please realize either frame of mind could seriously cost the OP.

The OP never even mentioned the type of loan she is seeking. But even so, our rates have improved significantly each day this past week, including yesterday. I can offer 5.25% without the lock fee on a conventional and/or FHA loan (prior to any loan level adjustements).

I just now pulled up the end of the day market commentaries from yesterday (I was shopping or catching up on my sleep from Black Friday) and the Cliff Notes indicate a very high probability the mortgage markets will be quoting below 5% for a fixed rate mortgage next week.

I am in the mortgage business and am very cautious about answering rate trend questions, even to complete strangers, strangers that don't even know my name. I can promise one thing, if I do give an opinion on where I think the rates are headed, it will offer more than a "cuz I said so" mentality....

This is the second post here today, where I have felt I have been particularly bitchy, so perhaps it's best I sign off for a while. I view other people's money as my own when giving advice and get upset when answers by others could do damage. I wish people were not gullible, but I witness it every day. I am sure this was not your intent, so I'll go away.
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Old 12-02-2008, 02:29 AM
 
222 posts, read 802,684 times
Reputation: 65
We didn't purchase the float down option (our mortgage officer actually suggested not to). We are house shopping and frantic that we are going to miss the rate drops but this bank has a 60 day shop and lock program that you can lock in the rate and continue to house shop for about 30 days and then leave about 30 days for closing. The float down was a option available for an additional cost but we decided not to do that. Here's to hoping we find a house now.
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Old 12-14-2008, 05:53 AM
 
Location: MID ATLANTIC
7,851 posts, read 19,199,975 times
Reputation: 8671
If you are in a lock and shop, there's not much you can do with the rate until you find a home. As an FYI, the rates continue to fall. Rates under 5% with zero points on fixed products are not out of the question. If your lock and shop is adding an 1/8% or 1/4% to your rate, that's the equivalent of paying points.

It's human nature to want the best deal. Unfortunately, so many of us get caught up just for a guarantee, we don't look at the cost of the guarantee. There never has been something for nothing, it doesn't exist.

If you paid money up front, when you find the property, re-shop your deal to make sure it's a deal. In other words, don't spend $1000 to recoup your $500. Check your lock and shop agreement for the terms to walk away. If you didn't get an agreement or didn't sign anything, you may not want to push the issue. It's hard for any lender to defend keeping a lock deposit if they didn't give you something at the time they collected money.

Good luck.
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