When to Lock

[SD Realtor]

Your comment about long rate locks apply in any era, today or otherwise. Getting a rate lock over a long period of time is either impossible or very expensive. Also contrary to what another poster wrote, long term mortgages do still follow the 10 year treasury in my opinion. The difference now is that the spread is larger due to the risk premium demanded by the secondary market. What has not changed is that mortgage rates tend to rise immediately when the 10 year rises but they do not fall immediately when the 10 year falls.

HLS is one of the mortgage brokers that comes to mind and posts here. You may want to dig up his posts and get in touch with him to compare programs he can offer verses the ones you have already sampled.

SD Realtor

[SD Realtor]

Your comment about long rate locks apply in any era, today or otherwise. Getting a rate lock over a long period of time is either impossible or very expensive. Also contrary to what another poster wrote, long term mortgages do still follow the 10 year treasury in my opinion. The difference now is that the spread is larger due to the risk premium demanded by the secondary market. What has not changed is that mortgage rates tend to rise immediately when the 10 year rises but they do not fall immediately when the 10 year falls.

HLS is one of the mortgage brokers that comes to mind and posts here. You may want to dig up his posts and get in touch with him to compare programs he can offer verses the ones you have already sampled.

SD Realtor

[SD Realtor]

Your comment about long rate locks apply in any era, today or otherwise. Getting a rate lock over a long period of time is either impossible or very expensive. Also contrary to what another poster wrote, long term mortgages do still follow the 10 year treasury in my opinion. The difference now is that the spread is larger due to the risk premium demanded by the secondary market. What has not changed is that mortgage rates tend to rise immediately when the 10 year rises but they do not fall immediately when the 10 year falls.

HLS is one of the mortgage brokers that comes to mind and posts here. You may want to dig up his posts and get in touch with him to compare programs he can offer verses the ones you have already sampled.

SD Realtor

[SD Realtor]

Your comment about long rate locks apply in any era, today or otherwise. Getting a rate lock over a long period of time is either impossible or very expensive. Also contrary to what another poster wrote, long term mortgages do still follow the 10 year treasury in my opinion. The difference now is that the spread is larger due to the risk premium demanded by the secondary market. What has not changed is that mortgage rates tend to rise immediately when the 10 year rises but they do not fall immediately when the 10 year falls.

HLS is one of the mortgage brokers that comes to mind and posts here. You may want to dig up his posts and get in touch with him to compare programs he can offer verses the ones you have already sampled.

SD Realtor

[SD Realtor]

Your comment about long rate locks apply in any era, today or otherwise. Getting a rate lock over a long period of time is either impossible or very expensive. Also contrary to what another poster wrote, long term mortgages do still follow the 10 year treasury in my opinion. The difference now is that the spread is larger due to the risk premium demanded by the secondary market. What has not changed is that mortgage rates tend to rise immediately when the 10 year rises but they do not fall immediately when the 10 year falls.

HLS is one of the mortgage brokers that comes to mind and posts here. You may want to dig up his posts and get in touch with him to compare programs he can offer verses the ones you have already sampled.

SD Realtor

[carlover]

Depending on the builder they will let you do an extended lock if you pay a deposit with the lender up front. We bought in Silhouette (4S Ranch) and closed in December. They allowed us to lock the rate for 4 months in September for a 1.25% deposit (100% of which would apply towards closing if we closed with their lender). We could have payed a smaller deposit but then some of it would have been “non-applicable” effectively making it a fee. We had the option to float down once within sixty days of closing, but the rates at that time were pretty much unchanged.

Originally we were going with their lender to get the 20K incentive and were going to use it to pay points to drop the rate. This would have given us a decent rate and the points paid on a purchase loan are tax deductible 100% that year (unfortunately the case is not the same for a refinance). By the time we got close to closing the preferred lenders rates (Countrywide) were high relative to the market. We chose to risk it and close paying zero points and using the 20K to pay off our options dropping the purchase price (and tax base), with the intent of refinancing ASAP. Our initial rate was 7.625% which is extreme but there were options available at the time for ~6.5% interest at zero points through dcu.org. We waited and managed to catch the dip on January 23 and locked in at 5.125% (2 Points) with dcu.org and closed last week. It’s been a roller coaster, taken them nearly 3 months to close, but they honored the rate lock even though it was only for 60 days, since all the delays were on their end.

In the end it comes down to your risk tolerance. If the builder are offering reasonable rates and can offer you an extended rate lock with a deposit it would be worth it in this volatile market. Just make sure the deposit is actually a deposit and 100% of it will roll over to escrow on closing.

[carlover]

Depending on the builder they will let you do an extended lock if you pay a deposit with the lender up front. We bought in Silhouette (4S Ranch) and closed in December. They allowed us to lock the rate for 4 months in September for a 1.25% deposit (100% of which would apply towards closing if we closed with their lender). We could have payed a smaller deposit but then some of it would have been “non-applicable” effectively making it a fee. We had the option to float down once within sixty days of closing, but the rates at that time were pretty much unchanged.

Originally we were going with their lender to get the 20K incentive and were going to use it to pay points to drop the rate. This would have given us a decent rate and the points paid on a purchase loan are tax deductible 100% that year (unfortunately the case is not the same for a refinance). By the time we got close to closing the preferred lenders rates (Countrywide) were high relative to the market. We chose to risk it and close paying zero points and using the 20K to pay off our options dropping the purchase price (and tax base), with the intent of refinancing ASAP. Our initial rate was 7.625% which is extreme but there were options available at the time for ~6.5% interest at zero points through dcu.org. We waited and managed to catch the dip on January 23 and locked in at 5.125% (2 Points) with dcu.org and closed last week. It’s been a roller coaster, taken them nearly 3 months to close, but they honored the rate lock even though it was only for 60 days, since all the delays were on their end.

In the end it comes down to your risk tolerance. If the builder are offering reasonable rates and can offer you an extended rate lock with a deposit it would be worth it in this volatile market. Just make sure the deposit is actually a deposit and 100% of it will roll over to escrow on closing.

[carlover]

Depending on the builder they will let you do an extended lock if you pay a deposit with the lender up front. We bought in Silhouette (4S Ranch) and closed in December. They allowed us to lock the rate for 4 months in September for a 1.25% deposit (100% of which would apply towards closing if we closed with their lender). We could have payed a smaller deposit but then some of it would have been “non-applicable” effectively making it a fee. We had the option to float down once within sixty days of closing, but the rates at that time were pretty much unchanged.

Originally we were going with their lender to get the 20K incentive and were going to use it to pay points to drop the rate. This would have given us a decent rate and the points paid on a purchase loan are tax deductible 100% that year (unfortunately the case is not the same for a refinance). By the time we got close to closing the preferred lenders rates (Countrywide) were high relative to the market. We chose to risk it and close paying zero points and using the 20K to pay off our options dropping the purchase price (and tax base), with the intent of refinancing ASAP. Our initial rate was 7.625% which is extreme but there were options available at the time for ~6.5% interest at zero points through dcu.org. We waited and managed to catch the dip on January 23 and locked in at 5.125% (2 Points) with dcu.org and closed last week. It’s been a roller coaster, taken them nearly 3 months to close, but they honored the rate lock even though it was only for 60 days, since all the delays were on their end.

In the end it comes down to your risk tolerance. If the builder are offering reasonable rates and can offer you an extended rate lock with a deposit it would be worth it in this volatile market. Just make sure the deposit is actually a deposit and 100% of it will roll over to escrow on closing.

[carlover]

Depending on the builder they will let you do an extended lock if you pay a deposit with the lender up front. We bought in Silhouette (4S Ranch) and closed in December. They allowed us to lock the rate for 4 months in September for a 1.25% deposit (100% of which would apply towards closing if we closed with their lender). We could have payed a smaller deposit but then some of it would have been “non-applicable” effectively making it a fee. We had the option to float down once within sixty days of closing, but the rates at that time were pretty much unchanged.

Originally we were going with their lender to get the 20K incentive and were going to use it to pay points to drop the rate. This would have given us a decent rate and the points paid on a purchase loan are tax deductible 100% that year (unfortunately the case is not the same for a refinance). By the time we got close to closing the preferred lenders rates (Countrywide) were high relative to the market. We chose to risk it and close paying zero points and using the 20K to pay off our options dropping the purchase price (and tax base), with the intent of refinancing ASAP. Our initial rate was 7.625% which is extreme but there were options available at the time for ~6.5% interest at zero points through dcu.org. We waited and managed to catch the dip on January 23 and locked in at 5.125% (2 Points) with dcu.org and closed last week. It’s been a roller coaster, taken them nearly 3 months to close, but they honored the rate lock even though it was only for 60 days, since all the delays were on their end.

In the end it comes down to your risk tolerance. If the builder are offering reasonable rates and can offer you an extended rate lock with a deposit it would be worth it in this volatile market. Just make sure the deposit is actually a deposit and 100% of it will roll over to escrow on closing.

[carlover]

Depending on the builder they will let you do an extended lock if you pay a deposit with the lender up front. We bought in Silhouette (4S Ranch) and closed in December. They allowed us to lock the rate for 4 months in September for a 1.25% deposit (100% of which would apply towards closing if we closed with their lender). We could have payed a smaller deposit but then some of it would have been “non-applicable” effectively making it a fee. We had the option to float down once within sixty days of closing, but the rates at that time were pretty much unchanged.

Originally we were going with their lender to get the 20K incentive and were going to use it to pay points to drop the rate. This would have given us a decent rate and the points paid on a purchase loan are tax deductible 100% that year (unfortunately the case is not the same for a refinance). By the time we got close to closing the preferred lenders rates (Countrywide) were high relative to the market. We chose to risk it and close paying zero points and using the 20K to pay off our options dropping the purchase price (and tax base), with the intent of refinancing ASAP. Our initial rate was 7.625% which is extreme but there were options available at the time for ~6.5% interest at zero points through dcu.org. We waited and managed to catch the dip on January 23 and locked in at 5.125% (2 Points) with dcu.org and closed last week. It’s been a roller coaster, taken them nearly 3 months to close, but they honored the rate lock even though it was only for 60 days, since all the delays were on their end.

In the end it comes down to your risk tolerance. If the builder are offering reasonable rates and can offer you an extended rate lock with a deposit it would be worth it in this volatile market. Just make sure the deposit is actually a deposit and 100% of it will roll over to escrow on closing.

[Author]

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