A family member is closing on a house the end of October and is considering whether to lock in a rate now (3.0% on a 15-year fixed-rate) or wait and see if the rates drop more over the next few weeks. If it were me, I would lock in now (and send the Fed a thank you card for not raising rates last week) but I am withholding my advice because I am by no means a financial expert (and I am also by nature risk-averse). After listening to long conversations about this over the last few days, I am wondering what people here think.
are you kidding??
3.0 on a 15 yr is GREAT!
Tell them to lock it in!!!
Lock.
Lock, we refinanced recently at 3% also. I was told to lock that rates would not go down and if they did it would be negligible.
Btw, the closing agent said that was the lowest she had seen and that we had done really well.
Yes I would lock, there’s more upside risk.
I work in mortgage lending - lock! Rates are very good right now - much, much likely that they will move up in the next 6 weeks - even without a Fed rate hike in October.
Lock. I’m not suggesting they do this, but if rates go down significantly enough, I think you can walk away from the original plan and only lose a small amount of money.
Some lenders offer lock with rate protection - if rate drops before closing you would get lower rate. See if your relative can get it from his lender.
Seriously, lock. How much lower could they possibly go by the end of October? I wish I was buying my first house at such low rates?
Generally, there is a cost to lock rate protection in terms of higher closing costs, points or SOMETHING. 3% is amazingly good, especially to those of us who have had mortgages of 12% and above!
If we could read the future with 100% accuracy, then none of us here would have to work our daytime jobs…
But seriously 3.0% vs 3.125% vs 3.25% does not make a whole lot difference, of course it depends on the loan amount but last time I’ve looked, it was nothing to fret about especially for 30-year mortgage.
Wow, a consensus - impressive! I do think they are going to lock in at 3% today, partly because even if rates do go down, they are not likely to go down by much, and it is of course possible (and probably more likely) that rates will go up. Also, there is the stress of having to keep checking what is happening with the rates.
As for the difference, from what I understand, for this loan the difference between 3.0% and 3.175% (which was the next-best rate they were offered) is about $2500 in interest.
I meant in monthly payment.
Its for a 15 yr mortgage, not a 30 yr.
$7 for $100k for 30-year increase per 1/8% interest per amerisave calculator
$6 for $100k for 15-year increase per 1/8% interest per amerisave calculator
^??
we have 9 years left on a 15 year mortgage- balance is $450,000.
we are paying less than $5000/ month.
where are you getting ^$ 6K / month for a 100,000 K mortgage??
$6 dollar not $6k per $100k loan in increment interest rate change. I’m saying the difference is not worth stressing about when to lock. It’s already very low interest rate.
agreed
Here’s an ending to the story that those of you who were wondering whether the difference between 3.0% and 3.125% was worth worrying about might appreciate. So they went in to lock the rate at 3.0% and ended up with a locked rate of [drumroll] 2.999%. They didn’t ask for it – the loan officer initially seemed to be processing things at 3.0% but at one point stopped and said something like, “Wait, I can give you 2.999%.” So she did.
Just for fun I ran the rates on the bankrate.com mortgage calculator, and over 15 years the difference is $151.47.