Today is Wednesday, 10/08/2008. This morning the Fed dropped interest rates by 0.5%. I was quoted 6.5% in good faith when I started. Last week the markets were horrible, and my floating rate went all the way down to 6%. Now, it's right back at 6.5%! I have exactly 2 weeks to lock in my rate. I am afraid that, if I wait, I will be forced to pay an even higher rate than what I started with. Please advise.
loanmasterone
Favorite Answer
When you wait for rates to drop you are gambling that they will not go up.
The feds lowered the rate today,so if it was me, and it is your money I am gambling with, I would wait. The lenders will feel the drop soon, therefore passing it on to you.
Thanks for allowing me to gamble with your money, it felt so good.
I would be interested to know how this came out please let me now via e-mail.
I hope this has been of some use to you, good luck.
'FIGHT ON"
mozell
To be totally honest, 2.75 points is high for that rate. There are a lot of factors that determine your interest rate, but a standard 30 year fixed rate with 20% down, good credit, primary residence, and full income documentation is currently priced at 6% costing 1.375% on a 45 day lock. You should be able to get 5.875% or so if you're paying that much. As far as locking goes, the market is extremely volatile right now - I would recommend locking; but there's no way to tell for sure what the market will do.
Your #1 fan
Do you have a floating rate option? If so, lock in the lower rate now and follow with the bank everyday. If it goes down to 6% make that your final rate.
Anonymous
I would lock it in. 6.5% is not that bad, and even if you are lucky it might get back to 6.0%. If you are happy with 6.5% which is what I locked in I would do it. It is easy to look back in 1-5 years to know what you should have done, but I think you would be safe @ 6.5%.
Pengy
The Fed dropping the short term interest rate has no effect on your mortgage rate, those are tied to the LIBOR rate.