FHA rates - are you KIDDING me???

[Anonymous]

Our LO just called - looks like today's rate is 6.625 with us paying 1/2 a point. He thinks they'll be better tomorrow or Wed.

[Anonymous]

...and our LO just called again. Says there was another rate reduction this afternoon; now it's 6.625 at par; we could get 6.5 paying 1/2 a point or 6.25 paying a full point. Going to sit tight and see what happens at the next update. This is the part that makes me crazy...will it go up? Go down? Stay the same? Only the shadow knows...

[KLGFCG]

Stupid question, but what determines if you're able to buy your rate down with points? Are points always available, only available under certain circumstances, or what? Just seems like no one would ever take, say, a rate in the 7's if you could pay points to get it down, but I'm probably oversimplifying or underestimating how quickly that would add up (1 point=1% of purchase price, right?). Is a point always equal to a set deduction off the interest rate (0.25%, going by desifink's example) or is that variable, too?   

Back on topic, I meet with my LO tomorrow to do my official loan application and hand in my documentation, and am hoping for 6.5% or lower. I'm totally risk-averse and if I can lock in on anything under 6.5, I'll be a happy cookie. I don't think I have the fortitude to deal with buying a house and watching interest rates daily!! You're brave, desifink.

[ShanetheMortgageMan]

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@KLGFCG wrote:

what determines if you're able to buy your rate down with points? Are points always available, only available under certain circumstances, or what? Just seems like no one would ever take, say, a rate in the 7's if you could pay points to get it down, but I'm probably oversimplifying or underestimating how quickly that would add up (1 point=1% of purchase price, right?). Is a point always equal to a set deduction off the interest rate (0.25%, going by desifink's example) or is that variable, too?   

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Paying points is always an option.  Not everyone starts level on the playing field, someone with a lower score could have a higher "base rate" than someone with higher scores... so the person with lower scores would have to pay more points to get the same rate as the person with higher scores got without paying points.  1 point = 1% of loan amount.  It doesn't always lower the rate by .125%, .250%, etc., it can vary depending on the price spread between each .125% in interest rate.  Sometimes paying 1 point could get a .375% lower rate if the price doesn't differ much per .125% of interest rate - or if the price changes significantly per each .125% in rate, then paying 1 point might only drop the rate by .125%.

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@KLGFCG wrote:

Back on topic, I meet with my LO tomorrow to do my official loan application and hand in my documentation, and am hoping for 6.5% or lower. I'm totally risk-averse and if I can lock in on anything under 6.5, I'll be a happy cookie. I don't think I have the fortitude to deal with buying a house and watching interest rates daily!! You're brave, desifink.

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Most people are like you - they see a rate they are comfortable with, if they decide they can't deal with a higher interest rate/payment, and if factors are saying interest rates having a chance of increasing, they choose to lock the rate in.  I am in the same boat, when I did some mortgage financing last year I locked in the rate as soon as there was sign of it increasing.  I do have some clients who like to ride out the waves though.  If I was purchasing right now, and was going to close in the next 2 weeks, I'd probably lock things in tomorrow if it doesn't look like rates will get better the next day.  If I was going to close in the next 4-6 weeks I'd wait to see how this week goes.  Either way, be sure to keep tabs on the market daily.

[Anonymous]

Shane...what is the best way to watch the market?  I want to know daily without having to call my LO everyday.  Is there a good website that you know of?  Or is my LO the best bet?

[Anonymous]

We locked in today! Our options were 6.5% at par, or 6.125 paying .625 point. We chose to pay the .625 point; we'll make that money up in 25 months - and our LO thinks we'll have some money left over in our seller-paid closing costs to put toward that too. I'm excited!!! MUCH better than the 7.25 we were quoted last week.

[ShanetheMortgageMan]

Yes rates are getting more attractive day by day lately, and are continuing to get better today too.

The website I check daily on where mortgage rates are going is a blog at http://www.mortgagenewsdaily.com/mortgage_rates/blog/.  Very easy to understand read and it's fun too.  Right now Float Club is in session!

[Anonymous]

Well I was able to lock in @ 6.00 with PHFA (a version of FHA in PA) a few weeks ago (late Sept)..The very next day after locking in my rate, they increased..My rate is locked in for 240 days (8 months)..Prior to locking in my rate I guess around August I was quoted 6.75-7.00 or something like that..

[nurseratchett]

I locked today at 6, and I'm very happy with that rate, considering rates at my lender were posted at 7.5 last week. Then again, when I bought my very first house in 1991, it seems the rate was around 10 or 11...so 6 seems great to me.

I am honestly just happy the seller took my offer, I got what I think is a great deal, and I locked at a rate that is more than acceptable to me.

[Anonymous]

We locked in yesterday!  Our LO said we locked into the day, so we are still playing with points. I think I am leaning towards 5.5 ( with a point) FHA, Long Island NY

I am so happy with this, as I was sweating bullets when it was in the 7's last week!