One of the quandaries of buying is trying to figure out when you should lock your interest rate. Depending on your lender and depending on the type of loan you are getting you have the option of locking in an interest rate before you actually close on the deal.
Some lenders allow you to lock in your interest rate 30 days before you close without charge. Others will allow you to lock it in for a longer time with a small fee.
So you have to gamble…will the rates be lower when I close? Or am I better off to lock in the interest rate now?
In our current mortgage market you win either way because it appears that for the short term at least interest rates will stay close to the low level of 5% or so for 30 year fixed loans.
Some mortgage companies publish their rates on their website.
Homestate Mortgage publishes theirs every day here.
Bryan Scoresby of Countrywide in Wasilla sends me an email everyday with his rates. Here is part of yesterday’s email from Bryan:
Bryan J. Scoresby
Countrywide Home Loans
March 23, 2009
Loan Product 30 years 15 years
Conventional Fixed with 1.0% LO Fee 4.750 4.625
FHA Fixed with 1.0% LO Fee 4.875 4.500
Rural Development with 1.0% LO Fee 4.500
AHFC First Time Homebuyer (Tax Exempt) 6.375 6.125
AHFC First Time Homebuyer (Taxable Program) 6.500 6.250
AHFC Taxable 6.625 6.375
Conventional rates are quoted based on a 45 day lock period. Government loans on a 45 day lock. Rural Development is on a 60 day lock. Locks up to 180 days and shorter locks of 10 days are also available. Changes in the industry are putting pricing adjustments based on credit score. Lower scores will incur higher rates or more costs. Bryan is committed to giving your customer the lowest available rate for the loan program. Countrywide also offers a very large loan product mix to choose from. If you have a need to fit your client (ARM, Interest Only, Fixed, Equity, Government AHFC), Bryan will find a Countrywide loan product to fit your buyers needs.
Mgr, HLC Sales
CMD 352-1 – Wasilla, AK RST
Countrywide Bank, FSB
There are at least a couple websites that aggregate expert opinions on future mortgage rates:
So far, it looks good for the short term, that is 30-90 days. There are indications that the interest rate will begin to rise by mid summer however. It’s important to remember that the longer term forecasts are always less accurate and many things can change the outcome but here are some predictions:
It doesn’t make a whole lot of difference when you lock right now because you will get an extremely good rate. I had a client close yesterday with a rate of 4.875% for a 30 year fixed rate loan, they were a little disapointed that they missed a dip of 4.6%, but that’s not a big thing. I personally expect to see interest rates drop even further in the next 6 months to a year.
But it WILL be a big deal if you wait until the rates jump to 8% or more.
Some experts predict that inflation is bound to hit us after all the stimulus money begins to have a big effect. Inflation is almost always followed by interest rate increases. But that is likely two years or more into the future. In the meantime, an opportunity is to be had now with low interest rates and relatively low housing prices.