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Lock, float, or wait?

We were quoted a rate of 2.75% for a 5/1 arm with $1300 in closing costs. We are trying to decide if we should lock, float, or wait a few months. We currently have a 5/1 at 3.75%.

What do you think rates are going to do over the next few months?
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November 09 2010 - Portland
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Answers (23)

jeff, i agree with you. also, just a friendly word of advice, you are not permitted by zillow to promote yourself on the advice boards. you seem like a good guy, so hopefully david will give you a call.
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November 18 2010

The 30 yr fix is a good choice and 4.125% is available today at the $1800 in fees depending on your specific situation.  As I said before, although we are cautiously optomistic about the market if you can get 4.125% don't be greedy, it's a great rate. 

If I can help at all feel free to cantact me. I'm right down the road in Eugene.

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November 17 2010
4.125 is available for $1800 in lender fees on a 30 yr fxd, depending on your scenario.
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November 17 2010
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We have not locked yet... The application process took a while to get the official GFE back. We have decided to just do a 30 yr fixed. We were quoted yesterday a rate of 4.375% with $1800 in total costs. It would be great to get it down to 4.125%. We may be greedy, but we want to minimize our increase in monthly payment (we currently have a 5/1 at 3.75%).

Thanks for all of your advice!
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November 17 2010
i would look at a 7/1 arm, rate is about an eigth to a quarter pointer higher, and you get an extra two years of protection. definitely worth it when rates are this low. since you first posted, rates have shot up for a few different reasons, but they have come back down today and yesterday. i would consider locking now if your satisfied with rate and cost. rates are only gonna go up from here, its just a matter of when.
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November 17 2010

I trust first that you've given some serious consideration as to why you would take a 5/1 ARM to begin with.  I am not anti- ARM but I think you need the right tool for the job and many times an ARM is taken for the wrong reason.

As far as rates go, I hoped you've already locked.  If you haven't, there is reason for some hope.  Currently, the technicals (and emotion) are running the market but the fundamentals reamin unchanged.  Growth is slow, unemployment is still high and the numbers don't support an improvement and the housing market continues to be disappointing.  Given these and the fact there is no sign of inflation there's simply no fundamental reason for the sell-off we've seen in the last few days that has led to an increase in rates.

Keep in mind too that we've seen corrections like this several times before as well.  March of '09, November' 09 and other increases have been corrected to reach new, lower rates.  I know it can be hard to believe but the people I listen to believe that we will see a correction that will drive rates at least part of the way back to where they were.

One last item to give you a little hope of rates coming down again on the 5/1.  The Fed Q E2 is getting some of its criticism because of WHERE the Fed is spending the money.  Traders expected that the 600 billion was going to be spent on 10yr and 30yr treasuries but now the Fed is planning on 2yr and 5yr buys.  This should help the shorter term rates as demand picks up for those notes.

Again, I hope that you locked and are on your way to getting what appears to be a really good deal but if not, you might consider waiting this out a little if you have the time (and the nerve).


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November 16 2010
I've never turned a guess into a powerpouint presentation before. Did it have nice pictures to go with it?
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November 12 2010
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Victoria, did he have any idea how high they could go and how fast? I know the $600 Billion printing press is a cause for massive inflation along with past government printing and spending.

I would like to have some idea about what to expect in general for the time ahead thus I would really appreciate more insight into this.
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November 12 2010
hope you locked  !
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November 12 2010
Lock. In our meeting Tuesday our lead mortgage lender showed us alot of trustable information that leads to believe rates will be going up, fast. He has no reason to tell us anything but accurate information, so I tend to trust it, you should too. Lock it in. Good Luck.
P.S. He has a whole powerpoint on it if you want, email me and I'll get it to you.
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November 12 2010
if you plan on closing in the next 7 days lock. If you are closing in december I would still float the bond will get better we have to many rookie bond traders in this market right now.
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November 10 2010
hope you locked  ( as rates are creeping the wrong way !)
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November 10 2010
I'd vote to lock... it can't come down too much further but could potentially go up quite a bit... pascal's wager...
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November 10 2010
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How can a borrower make a call on lock, floa, or wait when the lender is the one telling you what rates are doing.  You are at the mercy of lenders and they are trying to eat; where can borrower get info on par rates and what rates have rebates?
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November 10 2010
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I would avoid another adjustable mortgage and get a fixed rate one. It is not that expensive and you know what your payment will be 6 years from now.
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November 09 2010
For the short term, the mortgage backed security (MBS) market which directly impacts lender rates is turning ugly.  Many of the services I subsribe to suggest that if you are looking to close in the next 5 to 7 days, lock now.  If you are closing in the 8 to 15 days lock whenever MBS improve. 15 or more, float but be ready to lock.  These services are nearly all the same on the direction of rates and all believe rates are unlikely to improve much more going forward.  The good thing, however, is they also don't foresee rates skyrocketing any time soon either given snail's pace at which the recovery is progressing and nearly imperceptable job growth.
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November 09 2010
LOL.  2.75%?  Wait for 0%.....you think it's going to go below 2.75%?  Seriously though...most margins are pretty standard, but you want to know your margins and your caps.  2.75 may be nice now, but if you have a cap of 5, you can go to 7.75...and if your cap at 3.75 is less....you may be in a good spot right where you are.
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November 09 2010
It would be great to know what rates are going to do.  But just think in the grand scheme of things how AMAZING rates are right now.  If you are comfortable with the rate and payment lock in now.  Sounds like you are getting really low closing costs as well.  Good luck!

Brad Hartman
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November 09 2010
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That's a low rate. I would lock it. A bird in the hand...
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November 09 2010

If you like the rate, lock it. 

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November 09 2010
Lock Now.
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November 09 2010
if you like rate you can get now and it works for you ...lock it

that rate with those costs in Portland area  is almost too good to believe ...does this include title and escrow fees ( as these are pricey in your area )?

prepayment penalty?
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November 09 2010
No one has a crystal ball.  At some point, though, the rates are going to sart moving up.  That's just the way the market works.  If I were you and liked ARMs, I would lock.  But, that's just my personal opinion, NOT a professional opinion.
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November 09 2010
 
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