I realize forecasting mortgage rates is a crap shoot with market
volatility and all, but does anyone have a best guesstimate of where it
might be going in the short term? I am closing on a house on April
16th. Last I checked the bank gave me a rate of 5.25 (no points) but
she recommended we not lock and watch the market for a little while.
The rates looked like they jumped to the 5.4 region and than came back
down again. Should I try to jump on that 5.25 if it hits it again or
wait it out a little and see what happens with the new stimulus package
and the bond market?
Lock in. If it goes down, tell your agent you want the new rate. he/she will feed you a line of bull that they cant, but in the end they will give you the lower rate. Have a back-up bank. I did this 2 years ago and it worked fine (1/4 point lower). Consider the on-line banks. they are a pain, but good rates. Congrats on the house.
What term? I got 4 3/8 for a 15 year refi recently.
Conventional?
That doesn’t seem possible unless you bought it down a lot.
I think 4.375% is a great rate, but not impossible. I locked in a 4.75% (no points) for a 30-year mortgage recently. Ten-year treasury yields were very low early January, which caused mortgage rates to get very attractive. Unfortunately, the 10-year yield has come up a bit as treasuries have softened and it seems maybe the risk premiums have widened a bit too.
I’ve seen many mistakes made by people trying to time interest rate moves perfectly with disastrous results. I’d recommend the OP lock!
That doesn’t seem possible unless you bought it down a lot.
It was in early January, no points, origination fee waived b/c wife was a bank employee. No preferential treatment on rate or points though. That was the best rate available at the time and the qualification was 58% financed, credit score above 800, conventional. I actually rolled primary and vacation home mortgages into one.
Small differences in credit score/% financed makes big differences in rate. At the time I did mine the difference between 720 credit score and 800 was a full percentage point.
Mortgage rates are “nervous” right now. They vary daily. I filled out the paperwork and told the broker to lock it when it hit a certain rate. It was 4 3/8 for one morning. I don’t know if got there again. It’s easier to get a good rate if you don’t “have” to get the mortgage.
Congrats, that was excellent work.
The problem may be, with some banks, that an extended lock cost money. Some banks charge more rate depending on how long the rate is locked for, the lender hedging bets so to speak. Some lenders will allow a “float down” meaning that if the rates come down and you have already locked, you can re lock at no charge for the new rate. They usually limit this to one time during the time period. Talk to your Loan Officer about these options, if he or she can’t answer the questions, find a new lender. Also, are you getting a convetional, or VA, FHA, USDA insured loan? Just to throw something else at you, the National Association of Realtors publishes a number of 75% of real estate transactions do not close as scheduled. This usually occurs because of the seller, not the buyer. There are a list of like 88 things that can cause a hold up in the process. I do not know what type of property you are buying, if it is resale, REO, or new construction. The easiest is new construction, builders are really responsive sellers and get thing done pretty quickly. REO, well, you are dealing with a bank or investor that is probably got way too many things on their plate, and no personal stake in the sale, so they can take extra time. Resale, is kind of in between the previous two, most people selling their house are pretty good about getting the things done that they need to accomplish for the transaction to occur.
IMHO, I don’t see rates moving too much over the next 90 days. Remember, the difference between 5.25 and 5.40 is about $125 per year on $100000, or $10 per month. So, be aware of what upfront cost you are being charged in the points line of the GFE. The reality is that you will either move or refinance in the next 10 years so just do the math to make sure you understand what the total cost of the loan will be, your Loan Officer should be able to walk you through the process.
Good Luck, and congratulations.
Thanks for the answers all. It’s a FHA. I will talk to the bank about the “float loan.” The seller who I am buying the house from is relocating so after the offer was accepted it was turned over to the relocation company and other than some extra forms to sign (and that they wanted me originally to close on the house sooner) it seems like everything has went well so far. Right now the bank is charging me 1 point to buy the percentage down 1/2% if I want it.
I would shop that a little since you have some time. FHA rates are pretty strong right now. A little trick with FHA is to show a rate buydown and the post it to SRP, and it becomes Yield spread to the bank/broker. Just make sure that you ask the lender/broker lots of questions.
Again, Congrats on the home.
Well I went ahead and locked it recently at 5.25. The rates had jumped up to around 5.5, so when it went back to 5.25 I took it. I am not sure if I will buy a point. I am leaning towards not doing it because with family help we are going to start framing rooms in the basement right after we move in and get started on finishing the basement. I think I might potentially refi with the new appraised value when that is done to get rid of PMI. On another good note I sold my house after being on the market for only 7 days, with a closing date a week after I move into my new house.
Good for you, congratulations!!! 5.25% is a good rate! Good luck with the closing.
The situation in UK is a lot better if you are a mortgage holder - or a lot worse if you are anyone else.
I have a guaranteed mortgage offer of 2yr fixed at 4.99%. Or alternatively I can take the latest tracker offer which is at 2.85%
I’ve pretty much decided that I’ll take the tracker and look to fix in the future (in a couple of years), mortgage rates are going to stay low for a while and the extra repayments that I can make if I take the tracker will be a benefit even if the mortgage rates start to rise.
ARMs are always going to post a lower rate, well at least historically, maybe not now. Most of the loans I am doing in the states are 30 year fixed rate FHA (government insured) loans and other programs that are similar. Rates tend to be a tad higher, traditionally, but all things considered with the liquidity issues our institutions are having, still a great time to purhcase if you can.