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My husband and I are building a new house and are due to close on it September 19. We haven't locked in our interest rate because I've been hearing the fed is supposed to meet September 18 and will probably be lowering the rate. Our mortgage broker told us today that even if they do lower the rate on September 18, we won't get it because we are required to lock our rate in 4 days before closing. I'm angry about this because if the rate lowers before our closing, I want the lower rate! Is there anything we can do about this?
Don't worry about it.
Even if the Fed does lower the Prime rate, it has no direct relation to what your mortgage rate will be. Indirectly you'll be lucky to see a 1/8th of a drop in rate, and usually this drop is seen BEFORE the fed meets in anticipation of the rate drop. Now what do you think will happen if the fed goes against expectations and does nothing? Mortgage rates may go up.
So again, Don't worry about it. Lock in your rate for less than 14 days to get the absolute best rate, and enjoy your new home.
My husband and I are building a new house and are due to close on it September 19. We haven't locked in our interest rate because I've been hearing the fed is supposed to meet September 18 and will probably be lowering the rate. Our mortgage broker told us today that even if they do lower the rate on September 18, we won't get it because we are required to lock our rate in 4 days before closing. I'm angry about this because if the rate lowers before our closing, I want the lower rate! Is there anything we can do about this?
You'd be really angry if rates went up after you locked, and that meant you were forced to have the higher rate!
The conventional idea is that 10 year yields are similarly attractive to investors as are 30 year mortgage notes. The concept being that most homeowners only hold a mortgage note for about 9 years before a refi or a sale..... and that roughly matches a 10 year note.
Since the 10 years are backed by the USA and mortgages are backed by individual property/credit, the mortgage were usually 2 points higher to reflect risk.
As we all know in the last 5-7 years , holding a mortgage note 9 years is probably not the case.
That +2 percent add-on is only a guideline. Depending on other factors, it might be as high as +4 to attract investors or as low as +.5 (like during the 01-06 boom).
I think mtg rates will be very sticky. Even as the 10 year note rate plummets recently. The + spread will widen as lenders/investors want a little more return for the more risky mortgage choice.
That being said, you can still follow the 10 year yield rate and get a relatively decent idea of mortgage rates...not perfect but general idea...
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