Mortgage Rates Question

[Maikeru-sama]

As of this evening, I have a contract on a property and I am ready to lock in my interest rate. My Pre-Qual I got back in January 2009 was 4.5% Interest Rate but my lender told me that if he locked me in today, my Interest Rate would be 4.875% . After reading this article in the Wall Street Journal today, I realized that rates are creeping up.

Lender Advice - We don't close until July, and he thinks Interest Rates will come down and he wouldn't lock at 4.875%.

Real Estate Agent Advice - If you don't lock in at 4.875% then Interest Rates could go down but they could go up. He said he would go ahead and lock in the 4.875%.

Im suppose to call my lender tommorrow to watch the Bond Market and decide what to do. What do some of you finance guys think?

 

[theogt]

4.875% is a fantastic rate in the grand scheme of things.

It's a risk like anything else, but I'd lock that in, given that rates could be volatile in the short-term. It really depends on how much appetite the gov't has, and I wouldn't place any bets on what the gov't will do at all, one way or the other.

Had the same thing happen to me recently. I locked in at about .7 above where I was quoted when I got the pre-approval. That's quite a chunk of change of 30 years.

 

[Maikeru-sama]

Thanks Theo.

My lender stated on the phone that the Government had spent about a 1/3 of 1.5 trillion set aside to buy up bad mortgages. He said that he felt that the government would start spending alot more of the 2/3 remaining, to make the Interest Rates go down. But as you said, not sure if one wants to count on that.

The difference in payment for 4.5% and 4.875% is about $35, so im fine with that.

What I am really worried about is that it wont be 4.875% tomorrow, but something like 5.5% .

 

[big dog cowboy]

Call your lender and ask about paying down your intereste rate. Then do the math and see if it works for you. The Mrs. and I did that a few years ago and saved a ton of cash over the long haul.

 

[Maikeru-sama]

Call your lender and ask about paying down your intereste rate. Then do the math and see if it works for you. The Mrs. and I did that a few years ago and saved a ton of cash over the long haul.

I asked about this several months ago. He told me it would be $1500 per point. He said that if I stayed at the house for less than 8 years, it wasnt worth it, but if I stayed longer than 8 years, it would pay huge dividends.

 

[Joe Realist]

I am a believer in 0 point mortgages. a 1/4 to 1/8 difference wont mean much. The difference may be nominal. Plus, say your payment is $1475 a month. You would send $1500 anyway and save a little $$ in interest over long haul.

 

[WoodysGirl]

Call your lender and ask about paying down your intereste rate. Then do the math and see if it works for you. The Mrs. and I did that a few years ago and saved a ton of cash over the long haul.

My dad did this and got his rate down to 2%. He considered paying the other percentage points. I kinda talked him out of it. I'd rather he focus on saving for retirement. His mortgage pymt is pretty reasonable and he'll be able to afford it long after he retires.

 

[Maikeru-sama]

Well, it's 4:30 AM CST and as I feared, Bankrate.com is reporting 5% interest on 30 year mortgages .

Im so annoyed im thinking about pulling out....

 

[YosemiteSam]

Do the locked in rate. The locked in rate, locks the lender in, not you. We signed a locked in rate when we purchased our house. Three days before signing the papers, the rate dropped 1/4 of a percent. I told my lender to match or I would be go else where. They matched it.

 

[burmafrd]

Just stay away from ARM. TO me that is one of the critical mistakes made was to authorize those.

 

[Maikeru-sama]

Do the locked in rate. The locked in rate, locks the lender in, not you. We signed a locked in rate when we purchased our house. Three days before signing the papers, the rate dropped 1/4 of a percent. I told my lender to match or I would be go else where. They matched it.

I asked my lender yesterday if we could lock in a rate and then re-lock if it went down. He said Yes and No, so he is suppose to explain what that means when we talk today.

Looking at Bankrate.com, Interest Rates are at 5.08% and climbing.

The Wall Street Journal and Bankrate.com thinkt that interest rates will continue to climb in the short term but may fall again in the long term as foreclosures continue to be at record pace and unemployment claims still fairly high. Im suppose to close in July, so that is not good news for me. What sucks is that rates just started moving recently and were stagnant for quite a while before that.

 

[YosemiteSam]

I asked my lender yesterday if we could lock in a rate and then re-lock if it went down. He said Yes and No, so he is suppose to explain what that means when we talk today.

Looking at Bankrate.com, Interest Rates are at 5.08% and climbing.

The Wall Street Journal and Bankrate.com thinkt that interest rates will continue to climb in the short term but may fall again in the long term as foreclosures continue to be at record pace and unemployment claims still fairly high. Im suppose to close in July, so that is not good news for me. What sucks is that rates just started moving recently and were stagnant for quite a while before that.

Just remember, until you physically sign binding papers, you are not contractually obligated to that bank for your mortgage. Be careful what you sign until you are sure. Like I said. We locked in a rate and the rate when down. We got the better rate even though our mortgage broker wasn't so friendly with us afterwards. Of course, I wasn't about to pay thousands of dollars more so I could be friendly with some guy that I probably will never talk to again.

When you talk today. Make sure you understand clearly as you might get some double speak.

 

[Maikeru-sama]

Just remember, until you physically sign binding papers, you are not contractually obligated to that bank for your mortgage. Be careful what you sign until you are sure. Like I said. We locked in a rate and the rate when down. We got the better rate even though our mortgage broker wasn't so friendly with us afterwards. Of course, I wasn't about to pay thousands of dollars more so I could be friendly with some guy that I probably will never talk to again.

When you talk today. Make sure you understand clearly as you might get some double speak.

I just spoke to a few Loan Officers, one being an employee for Rodney Anderson to get some other opinions and looks like everything my loan officer is telling is extremely accurate. I didnt think he was being dishonest, but when you are talking about borrowing a ton of money, you have to be prudent and look at every angle.

 

[dcdallaschick]

Just stay away from ARM. TO me that is one of the critical mistakes made was to authorize those.

The problem wasn't really with the ARM loans, it was the people they were giving them to--people who couldn't afford to make the equivalent fixed-rate payments.

I got an ARM when I bought my first house, even though I could have afforded the higher fixed rate payment, and it was a great idea. I used the extra money I ended up with every month to fix up/furnish the house, since I only had a small apartment's worth of stuff to put in it. Granted, I lucked out timing-wise, and the rate ended up going down every year--but even if it had gone up every year, I still wouldn't have been over a barrel, since I had made sure I could afford to do so. Since it was capped as to how much it could go up each year (and the rate fixed after five years), it was easy to predict what worst-case scenario payments would have been.

We just closed on a re-fi and got a 30-year fixed for 4.75% (which was about an eighth of a point higher than what we were initially quoted when shopping around Jan/Feb of this year). It took FOREVER, though. Good luck!

 

[theogt]

The problem wasn't really with the ARM loans, it was the people they were giving them to--people who couldn't afford to make the equivalent fixed-rate payments.

I got an ARM when I bought my first house, even though I could have afforded the higher fixed rate payment, and it was a great idea. I used the extra money I ended up with every month to fix up/furnish the house, since I only had a small apartment's worth of stuff to put in it. Granted, I lucked out timing-wise, and the rate ended up going down every year--but even if it had gone up every year, I still wouldn't have been over a barrel, since I had made sure I could afford to do so. Since it was capped as to how much it could go up each year (and the rate fixed after five years), it was easy to predict what worst-case scenario payments would have been.

We just closed on a re-fi and got a 30-year fixed for 4.75% (which was about an eighth of a point higher than what we were initially quoted when shopping around Jan/Feb of this year). It took FOREVER, though. Good luck!

Another problem was that many banks were putting language in the ARMs that prevented re-fis or selling the home before the initial term without having to pay some sort of penalty.

 

[burmafrd]

The ARM was a bad idea from day one and it came back to really hurt us.
This country had done fine with 30 year or 15 year fixed mortgages for a long time. All the ARM did was allow lots of abuse and end up hurting many more then it helped.

 

[AbeBeta]

The ARM was a bad idea from day one and it came back to really hurt us.
This country had done fine with 30 year or 15 year fixed mortgages for a long time. All the ARM did was allow lots of abuse and end up hurting many more then it helped.

Actually, the ARM is a great idea for people who expect to sell their homes and upgrade within the ARM period. Those folks who are now in the adjustable part of their loans are scoring big time right now b/c the LIBOR is in the crapper

 

[Maikeru-sama]

Well, this article from MSNBC tells it all

http://www.msnbc.msn.com/id/30988937/

I went ahead and locked in my rate at 5.25%. Bankrate.com says today's average was 5.27%. Based on the 3 Scenarios (Hope they will go down before closing, Move my closing date to within 15 days to get 5% and just locking in 5.25% today), I decided this was the best option as historically, 5.25% isn't bad. I called two other loan companies and my real estate called another two loan officers he knew and each came back and said they would not take the risk and if you could get 5.25% then take it.

I already told my lender that if rates go down significantly 15 days before closing, he will have to relock me in that rate or im going to someone who can.

What sucks is that me and the seller were in agreement on Monday but they waited until Wednsday to sign the contract and get it too me so I could have locked in my rate on tuesday before all the mayhem yesterday :bang2: .

Anywho, the house is being inspected tomorrow and I am one step closer to getting all this behind me.

 

[Joe Realist]

Well, this article from MSNBC tells it all

http://www.msnbc.msn.com/id/30988937/

I went ahead and locked in my rate at 5.25%. Bankrate.com says today's average was 5.27%. Based on the 3 Scenarios (Hope they will go down before closing, Move my closing date to within 15 days to get 5% and just locking in 5.25% today), I decided this was the best option as historically, 5.25% isn't bad. I called two other loan companies and my real estate called another two loan officers he knew and each came back and said they would not take the risk and if you could get 5.25% then take it.

I already told my lender that if rates go down significantly 15 days before closing, he will have to relock me in that rate or im going to someone who can.

What sucks is that me and the seller were in agreement on Monday but they waited until Wednsday to sign the contract and get it too me so I could have locked in my rate on tuesday before all the mayhem yesterday :bang2: .

Anywho, the house is being inspected tomorrow and I am one step closer to getting all this behind me.

Don't sweat it. These rates are awesome.

 

[theogt]

Don't sweat it. These rates are awesome.

Exactly.

Enjoy your new home.