Rate options...what do do? Quick!

[Mike_B03]

Just talked to our LO and looked at some rates...here are the options...

Based on old mid-score of 665:

Option 1: Lock today @ 3.5% and get $700 in credit at closing

Option 2: Wait 12 days (so we are within 30 days of closing) and get 3.5% + $1400 credit at closing (of course this could change between now and then, different rate, different incentive)

Based on possible new score of 680+ (should be over 680):

Option 1: Lock today @ 3.375% and pay $360 (1/8 of a point)

Option 2: Wait 12 days (so we are within 30 days of closing) and get 3.375% + no credit at closing (of course this could change between now and then, different rate, different incentive)

[MainMan]

Take the rate today and lock it. What if the rate changes in next 12 days? What if the score doesn't get to 680? We all know how these CA work. They are quick to take points away but drag their ass to give them back. 700$ compared to the amount of cash your handing over anyway is nothing.

[Mike_B03]

That is basically what my wife and I came up with as well. Plus we'd rather pay the $360 and buy the 3.375% vs 3.5% because over the life of the loan, it means $7200...yes it's "costing" us $1060 (the $360 we have to pay + the $700 we'd get back) but still, if someone said I'll give you $1060 if you give me $20/month for the next 30 years I wouldn't take the deal.

First thing is first, they are going to run our credit and see what the scores are. If the mid score isn't above 680, then it's a moot point anyway and we'll lock in today at 3.5% and get $700 credit at closing.

[foofighter74]

All of those options look pretty good. I think i'd pay the $360 as well.

We locked today as well @ 3.25% with no points.  I wanted to get the rate float down option...but it's too much $$ given that our rate is already low.  They sometimes offer free float down but not at the moment.

[Mike_B03]

K so the credit score came back at 704 which means at 3.5% they can do $1500 back or pay $380 to buy 3.375% rate or $1100 to buy 3.25% rate. What to do what to do?

[Mike_B03]

Ok so a snag sort of came up...if we don't do the 3.5% with $1500 credit, then we don't have enough seasoned funds (from 2 statements ago)  to cover closing if they only allow us to use our personal accounts. If we can use our business bank statement also, then we have more than enough. When we initially applied, we gave them both statements for personal and business and I was under the impression that we can use both.

So we "locked" in at 3.5% with $1500 credit but the LO said we have up until next Friday to change to a different rate though it would be based on today's rate sheet, so we can go back and do the 3.375% with $380 due or 3.25% with $1100 due. I am going to talk to the loan processor on Monday and see if we can use both business and personal funds and see from there. 

Excited to get the rate sheet locked in though and very happy with the 704 mid score. Even the 3.5% rate is good, so if it stays at that, still not bad.

[Dustink]

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@Mike_B03 wrote:

Ok so a snag sort of came up...if we don't do the 3.5% with $1500 credit, then we don't have enough seasoned funds (from 2 statements ago)  to cover closing if they only allow us to use our personal accounts. If we can use our business bank statement also, then we have more than enough. When we initially applied, we gave them both statements for personal and business and I was under the impression that we can use both.

So we "locked" in at 3.5% with $1500 credit but the LO said we have up until next Friday to change to a different rate though it would be based on today's rate sheet, so we can go back and do the 3.375% with $380 due or 3.25% with $1100 due. I am going to talk to the loan processor on Monday and see if we can use both business and personal funds and see from there. 

Excited to get the rate sheet locked in though and very happy with the 704 mid score. Even the 3.5% rate is good, so if it stays at that, still not bad.

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Run the number's on a mortgage calculator. Over the life of the loan how much more are you paying for 3.5% vs 3.25%. On a 30 year $250,000 loan it is about a $12,500 difference. So, in that case it would be do you want $2,600 now or $12,500 over the next 30 years.

[Mike_B03]

The loan is for $300k so the difference between 3.5% and 3.25% is an additional $15,000 in interest over 30 years...now we would save $2600 now so it's a net savings of $12,400. The payment difference is $40/month so the break even point is 5 years 4 months. We'll definitely be in this house much longer than that so it makes sense to buy the lower rate but it would also be nice to have the extra $2600 in our pocket, there will be a lot of expenses once we move in.

Like I said, if we cant use both the business funds and personal funds toward closing, then its a moot point because we dont have the additional seasoned funds to support the $2600, so we'd have to go with the 3.5%. Im waiting to hear back from the lender on which funds we can use.