When should I lock in an interest rate?

[Anonymous]

Greetings All,

I had an offer accepted May 11th, with closing set for early July. The mortgage lender ran the numbers by us, closing and cash needed. The Interest rate we got on the quote was 3.375% which I hear is good for someone with sub 700 credit on an FHA, they also told us that if we wanted to we could pay extra to bring it down to a under 3.0% however, the hold up was that the closing date was far out and the seller is still occupying the home. The lender said it would be risky to pay to lock in a 30 day and the seller not be out of the house by closing.

So here we are almost a 3 weeks later and still not locked in rate and I fear the opportunity for that 2.75% is gone.

What can I do, should we take the risk and lock in now or wait it out?

[peter1974]

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@Anonymous wrote:

Greetings All,

I had an offer accepted May 11th, with closing set for early July. The mortgage lender ran the numbers by us, closing and cash needed. The Interest rate we got on the quote was 3.375% which I hear is good for someone with sub 700 credit on an FHA, they also told us that if we wanted to we could pay extra to bring it down to a under 3.0% however, the hold up was that the closing date was far out and the seller is still occupying the home. The lender said it would be risky to pay to lock in a 30 day and the seller not be out of the house by closing.

So here we are almost a 3 weeks later and still not locked in rate and I fear the opportunity for that 2.75% is gone.

What can I do, should we take the risk and lock in now or wait it out?

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Following as I do not close until October.

No way to predict what interest rates will do but from what I've read, we may not have reached the bottom yet.

[Cred4All]

I locked mine in with Navy the moment I was able to, even with a slight adjustment/drop, wouldn't have been worth losing what I was quoted.

[NC_Mtg_Loaner]

Well, it isn't often that one can truly predict where rates will be or are going, but this is one of those instances.   

Rates pretty much have hit bottom and aren't going anywhere for a while. 

In order for them to go higher, they'll need some sort of positive global economic news which we MIGHT see in Q4 or 2021 or 2022. 

Lower?  not really possible since banks hedge the rates they offer to the US 10 YR Treasury Bond yield which has hit a floor and won't be going any lower.   Most economists have already commented on the horrible effect negative interest rates would have on US Treasuries and the Fed has pretty much stated they wouldn't likely "go there" with their policy. 

It's just a shame your lender doesn't have a more favorable price on a "longer term lock" if that's what's making you nervous, but you really should rest assured that you'll get your chance to lock in your low rate soon.   (you can ask about the cost/price to extend your lock rate and see if it's reasonable)

[CreditFun]

Lock a rate you can live with.  2.75% is less than rate of inflation.  It's free money to own real estate.