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Old 06-17-2009, 01:21 PM
 
14 posts, read 55,376 times
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About 2 weeks ago, which happened to be the worst week for me to make this decision I know, I locked in to a Wells Fargo 30-year at 5.75%, no points. We have excellent credit scores (high 700's for both of us) and are buying a modestly priced house with 27% downpayment, so no issues there. I chose Wells Fargo because my current mortgage is with them and I just feel better going with a company I know versus saving a quarter-point going with a company I don't know and they not show up at closing or call me the night before with some new fee/figures...

That said, rates went up to 6% soon after I locked in and so I was relieved I locked in when I did. But this week they've plummeted back down and are now at 5.3875%. I spoke with my Wells Fargo rep and he says it will cost a half of a point fee to re-lock at the current rate.

So, presently I've been watching the rate drop all week, with it presently at 5.3875. If it goes down to 5.25% tomorrow/Friday I plan on paying the float-down fee and locking in at that lower rate, which will save me ~$100 per month. I plan on staying in the home for a long time - at least 10 years if not many more. My wife and I stayed in our too small townhouse for 9 years when we only expected to stay in it for 5 max, so I'm confident we'll stay for a while in the new one.

As I already royally screwed up in locking in at 5.75 when I did, I just wanted to get others' opinions on my approach? Is paying this fee a dumb idea? Should I gamble further and wait and hope it goes down to 5% again?
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Old 06-17-2009, 01:58 PM
 
28,449 posts, read 72,693,835 times
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Not enough info for a purely "dollars and sense" answer -- the questions would be EXACTLY how much you are borrowing and the certainty that you have about staying put for 10+ years, based on age/ employment/ family status et cetera...

My gut says 5.25% is about as low as things are going to get for the next 30-60 days, I'd probably pay .25% to get that.
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Old 06-17-2009, 02:08 PM
 
14 posts, read 55,376 times
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Thanks for the response. Loan amount is $280k on a $385k house. I've been at my job for almost 10 years and they'd have to lay me off (no indication of that happening as I was recently promoted) for me to leave at this point. My wife is a stay at home mom. She works part-time now but will start working full-time within a year or two once my youngest is in 1st grade.

I really don't see any reason for us to want to move (I know, probably lots of people say that!) within the next 20 years. As I had mentioned - we've been in our 'starter home' for almost 10 years when we expected to only be in it for 5, as we're just not the 'moving a lot' type. Only reason we're moving now is because my young kids are only gonna get older and the thought of living with 2 teenagers and 2 dogs in a small townhouse in 10 years scares the hell out of me : )

My gut tells me I'd be an idiot to risk the 5.25%.
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Old 06-17-2009, 02:09 PM
 
Location: Denver, CO
1,800 posts, read 4,160,362 times
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I wish I could tell you how the rates will behave even 1 hour from now, things seem so volatile these days. You need to look at your cash reserves and determine whether that is something you want to do upfront and save in the long run. I can tell you that we bought at 6.125 a year ago and just refinanced at 4.5. However we never cried over spilt milk and have thoroughly enjoyed our new house this past year. The rates are what they are when you have to purchase.
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Old 06-17-2009, 02:14 PM
 
14 posts, read 55,376 times
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Thanks Moonwalkr. That's how I've been rationalizing locking in at 5.75%, but it's not working for me as I've been stewing about it since I locked in : (

The thought of saving $100 per month on the mortgage over at least 10 or more years seems like a great deal to me.
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Old 06-17-2009, 02:24 PM
 
Location: Denver, CO
1,800 posts, read 4,160,362 times
Reputation: 1390
I hear ya man, it can drive someone insane staring at the rates bouncing up and down when you are buying. It seems financially sound to me to pay $1400 to relock and save $100 a month. Whatever you do just approach it as any financial transaction and weigh the cost and benefits, don't let emotions get the best of you since what's done is done. I'm sure you would be breathing a sigh of relief if the rates shot up to 7%, eh?
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Old 06-17-2009, 02:27 PM
 
14 posts, read 55,376 times
Reputation: 17
Looks like the 10 year treasury just shot up since noon today, which was about when I last looked So I don't see the rates going down to 5.25 tomorrow. : (
I'm still hoping though!
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Old 06-17-2009, 04:50 PM
 
133 posts, read 484,311 times
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Here in Alabama today they went down to 5.0 and 5.125 around town.......
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Old 06-17-2009, 05:19 PM
 
28,449 posts, read 72,693,835 times
Reputation: 18469
Default Good news...

Quote:
Originally Posted by southern by choice View Post
Here in Alabama today they went down to 5.0 and 5.125 around town.......
The "inflation mongers" ought to walk around a bit, huh?

I really am pretty surprised just how much local variability there still is in mortgage rates, but I guess it makes sense -- local conditions determine risk for the housing stock and if the demand for borrowing and the risk of those loans going bad are both low there is no reason that rates would not fall.
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