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When to start our application and lock our rate?
I e-mailed our mortgage girl this morning (I work for the bank we'll be using for the mortgage, and I've been keeping in contact with her often) letting her know our offer has been accepted and that our closing date is set for August 24. I told her I'd be in more contact with her as that date got closer.
She e-mailed back wondering when we want to start our application (we've been preapproved) and lock in our rate.
When should we do this? Right now, the rate is very good (plus we get a small portion off since I'm an employee), but I know there is no way to predict what it will do in the next 3 1/2 months. A coworker of mine who used to work in real estate mentioned that it's an election year and rates usually drop during an election year, but because they are already low it's hard to tell how much lower or if at all they will go.
Any thoughts/advice is appreciated!
Re: When to start our application and lock our rate?
You locked at 3.5%? I am in Texas and we have great credit, and are doing a 95/5 conventional 30 year fixed loan... and yesterday the best rate we could find was 4.0%!
I know they are different based on the type of loan you are doing and the lender... but curious- are you doing a 15 year or 30?
If the rate is good, I would lock sooner rather than later. We had to lock about a month ago when the market was doing well and got stuck 2/8s higher than we thought we would. If the situation in Europe starts looking better, rates will probably go up. I really don't think they can go much lower than they are right now so IMO you have more to lose by waiting than you have to gain.
When I was waiting to lock I used this blog: http://www.realtor.com/home-finance/market-commentary-news/
The guy basically talks about events of the week that could lead to rate changes.
Thanks ladies! I think I'll talk to our mortgage lady on Monday (her office closes at 3) and see what she recommends too. Right now, the rate is at 4%, but with my employee discount, we are looking at a 30 year rate of 3.875%.
I just remembered that we wrote into our contract (per our realtors suggestion) that if it goes above 4.875%, we renegotiate our contract. She said that that's pretty standard with new construction in our area. But, I think we still want to lock it in sooner rather than later.
We're doing a conventional, 30-year fixed, 80/20 loan, and are paying 0.75 points to get the lower rate. It was worth the little bit extra at closing to get the savings over the life of the loan. We were fortunate because we got 2 lenders into a bidding war over our loan. We were able to negotiate the rate and points to where we felt we were getting a sweet deal.
If anyone is reading this and thinking about choosing a lender, my advice is to work with 2 that you like throughout your entire shopping process, and then let them work for it to offer you the absolute best deal possible when the time comes. Head to head competition is good for your bottom line!