New Home Construction 120-180 Day Rate Lock, Worth It Right Now? (1%, mortgage)

[rob stolen]

Hello,

I am about to sign a contract for a new build home and will start the loan process soon. I've been following interest rate trends and future behavior closely and I know that the FED's program in buying Mortgage Backed Securities will end at the end of March, which is why interest rates are so low now. It is still unknown whether this program will continue after March.

My home is projected to be finished by May-Jun. From the articles I've been reading on WSJ and CNN Money, etc., they expect interest rates to increase .5% - 1% by later this year (obviously they could be completely wrong).


I have a low 700 Fico and would be able to obtain about a 5% interest rate right now. Would it be wise to lock in a rate for 120-180 days? Typically, a 180 day lock would cost 1 point over a 30 day lock.

I'm concerned it might be a waste of money to do so if the FED continues its program after March since the housing market has fallen so much as of late OR the interest rates may not increase that much when my house closes in May/June.

What do you guys think?

[2bindenver]

History of interest rates has little bearing on future actions. Is unemployment still high? Is inflation in check? Have we experienced a collapse of some market or a large terror attack?

If you are concerned about it then make a decision. No one has a crystal ball.