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Old 06-08-2009, 03:41 PM
 
Location: Keller, TX
5,674 posts, read 5,513,909 times
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So rates are in the 5.625% range and climbing. My new construction home won't be done until late September or early October. I can only lock in 30 days before closing. By then we could be looking at some gargantuan rate increases -- 9%? 10%? Who knows...

I'm pondering whether I should break my contract. My earnest money is only $500, but in the contract is a stipulation that they can go after me for $5000. This is understandable, but losing $5000 one time would be better than losing $4800/year (or shedding $400/month from my monthly budget) because rates went through the roof while the house was being built.

I can give more details if wanted. Thanks.
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Old 06-08-2009, 03:58 PM
 
28,461 posts, read 75,420,730 times
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Unlikely.

The rates move dynamically, in response to other rates, but not too terribly abruptly. Over the last 24 months the low was about 4.85 and the peak was about 6.78.

The most volatile upward trend over 12 months was probably May 94 -95 where rates moves about 1.5 points.


Mortgage Rate Chart - Weekly Rate update and Rate trends

National Average Mortgage Rates ~ Historical Data


Does you contact speak to financing? Builders typically include sweeteners if /when they need to...


How would rising rates effect your ability to obtain financing?

You don't "lose $4800/yr" or anything like that by financing, no more than you 'save' when the rates fall. The cost of money is something that you have to understand before you agree to handing over a deposit...
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Old 06-08-2009, 04:11 PM
 
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Certainly buying power has erroded big time the last two weeks. I have an offer on short sale watching rate shoot up. I calculated that if rate go to 6% I will lower my offer or pull out since at that point it won't be as interesting as the time when I made the offer. But I do expect that prices have to adjust to that but there may be a lag before it works through the market.

Good luck to you and it's wise the re-evaluate your codition. I know I do.
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Old 06-08-2009, 06:49 PM
 
Location: Plano, Texas
1,675 posts, read 6,624,400 times
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Why not look into some existing homes. we are in a buyers market and you can find many wonderful deals in around the dfw area.

also, many recently built homes which nobody has lived in are sitting vacant with many buyer incentives. What area your looking to buy in?
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Old 06-08-2009, 09:48 PM
 
Location: Keller, TX
5,674 posts, read 5,513,909 times
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Quote:
Originally Posted by chet everett View Post
The most volatile upward trend over 12 months was probably May 94 -95 where rates moved about 1.5 points.
They've moved 0.7 points in 19 days though.
Quote:
Originally Posted by chet everett View Post
Does your contact speak to financing? Builders typically include sweeteners if /when they need to...
Even after the contract has been signed? I got some concessions already, but I think it's unlikely anything will be changed now.
Quote:
Originally Posted by chet everett View Post
How would rising rates affect your ability to obtain financing?
I think I'm safe as far as qualifying. Although I'm not sure...
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Old 06-08-2009, 09:50 PM
 
Location: Keller, TX
5,674 posts, read 5,513,909 times
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Quote:
Originally Posted by MeInDenudinFL View Post
Certainly buying power has erroded big time the last two weeks. I have an offer on short sale watching rate shoot up. I calculated that if rate go to 6% I will lower my offer or pull out since at that point it won't be as interesting as the time when I made the offer. But I do expect that prices have to adjust to that but there may be a lag before it works through the market.

Good luck to you and it's wise the re-evaluate your condition. I know I do.
Thanks. Buying a house has been about the least fun thing I've ever tried to do.
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Old 06-08-2009, 09:54 PM
 
Location: Keller, TX
5,674 posts, read 5,513,909 times
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Quote:
Originally Posted by VictorBurek View Post
Why not look into some existing homes. we are in a buyers market and you can find many wonderful deals in around the dfw area.

also, many recently built homes which nobody has lived in are sitting vacant with many buyer incentives. What area your looking to buy in?
Keller, with some interest in Roanoke, Trophy Club, Watauga, and northern North Richland Hills. I could look into an existing home. I've done quite a bit of that in the past year and I've been mostly unimpressed with most of the single family residence floor plans.

Hindsight being what it is, though, I should have bought a house in April.
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Old 06-09-2009, 07:13 AM
 
4,968 posts, read 12,575,064 times
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Quote:
Originally Posted by Nepenthe View Post
So rates are in the 5.625% range and climbing. My new construction home won't be done until late September or early October. I can only lock in 30 days before closing. By then we could be looking at some gargantuan rate increases -- 9%? 10%? Who knows...

I'm pondering whether I should break my contract. My earnest money is only $500, but in the contract is a stipulation that they can go after me for $5000. This is understandable, but losing $5000 one time would be better than losing $4800/year (or shedding $400/month from my monthly budget) because rates went through the roof while the house was being built.

I can give more details if wanted. Thanks.
Wow, rates in the mid 5's and people want to break contracts.
Highly unlikely that they hit "9% or 10%" by August or September.

Who says you can only lock in 30 days before closing...the builder's mortgage company? If you are so worried use a different lender where you can lock for a longer time..

Did you consider that rates might go up while you wait for a home to be built? Maybe as other posters have suggested you are a better candidate to purchase an existing home.
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Old 06-09-2009, 08:23 AM
 
2,727 posts, read 4,632,564 times
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Are you suggesting a full percentage interest rate increase is nothing? On a 200K (just an example) that would be like more than 20K for the last couple of weeks. That is 10% increase in value (or decrease in buying power). I don't see house prices declining that fast in a couple of weeks.

The OP concern is a legitimate one and nothing funy about it.
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Old 06-09-2009, 09:47 AM
 
186 posts, read 761,022 times
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Quote:
Originally Posted by MeInDenudinFL View Post
Are you suggesting a full percentage interest rate increase is nothing? On a 200K (just an example) that would be like more than 20K for the last couple of weeks. That is 10% increase in value (or decrease in buying power). I don't see house prices declining that fast in a couple of weeks.

The OP concern is a legitimate one and nothing funy about it.
Agree, I Just pulled a bid on a house with a locked in 4.75%. A week later I'm quoted 5.75%!!! Am I going to push that into my next bid? Yup. Will it work? Maybe not the first time, but it will trickled down and work its way into property prices IF these rates don't correct, which I don't see them doing anytime in the next few weeks.
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