Do I lock in my interest rate or Float?

Mortgage and Lending with Choice Finance Corporation

This is the million dollar question right now. The number 1 reason that people who can refinance, are waiting is the expectation or even fear that rates will plummet and they will be stuck with a 4.875% rate. My opinion on this has changed recently. Back in the good 'ol days (2003-2006) I would always recommend locking. Rates were always in danger of shooting up and fast! In August of 2003 we were enjoying the lowest rates we had ever seen, I was offering 5% 30 yr fixed mortgages with NO POINTS and on some days with NO COST. Then one day the market moved and the 5% rate went to 6% and did not come back down to the 5% level with any consistency until recently. I had several stubborn clients that were waiting for rates to go just a little lower before they pulled the trigger, they ended up either not refinancing or taking ARM's to obtain the rate they desired.

I am not concerned that this will happen in the immediate future (next 30 days) . The Federal Reserve is taking drastic steps to ensure that rates remain low. They are only about 1/3rd of the way through a $300 billion treasury purchase that is designed to keep rates low and maybe even push them lower. Will rates spike? Absolutely, but it does not appear that it will happen anytime soon. What is a rate lock? click here

So what is the benefit of floating vs. locking ?

You could easily get a better rate. The shorter term that I lock a rate, the better price the lender will pay. This is a savings that I pass directly on to my clients. Example: Let's say that a lender is paying 1.25% for a 5% rate on a 45 day lock; that same lender may be offering the same 1.25% for 4.75% on a 10 day lock. If you have already submitted your loan to me and are clear to close- under this scenario you would get .25% better in your interest rate. Check out my site for daily rate updates and to monitor market movement

Now, what if rates go up?

Chances are, the improved PRICE to obtain a rate, will wash the loss versus locking in for a longer term. If this does not happen, then we can wait for rates to return to an acceptable level, since we would be cleared to close, we could close quickly. It is also possible that while your loan is waiting to be underwritten, rates could greatly improve- under this scenario, we could lock for 30 days and know we have a great interest rate.

If this is you, than do not wait to start the process. Get your loan application completed at Let's get you ready to close, and when the rate comes down to where YOU want lock, we can lock.

Please feel free to call me anytime with questions. Allow my experience to be your resource!

Josh Burley
Sr. Loan Officer
Choice Finance Corp.
301.881.8900 x125

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