I just applied for a refinance and my loan officer asked if I'd like to lock in my rate or float. Which should I do?
John, I would absolutely lock in your loan. The market has drifted downward in the last few days but is extremly volatile. Also, when you lock in ask the bank to reduce their fees. Business has slowed down and to earn your business banks are reducing what they are charging if the client asks. For example we have 0 in bank fees on all borrowers with a 700+ credit score. | 09.24.13 @ 18:12
Your mortgage professional should be able to give you lock and float advice. True professionals follow/subscribe to the MBS markets and can tell a bit ahead of time if rates are going to shoot up or not.
A big question that needs to be answered before someone can hand out lock/float advice is when are you closing on your loan?
If you are 30+ days out, then it may be ok to wait-as you could then lock on a 15 day which has better pricing than a 30 day lock. So even if the market gets slightly worse in the next 15 days, your price should be pretty close to the same. If the market tanks though is when this would be an issue--your loan officer should be able to explain the price difference in dollars to lock now vs waiting, and with that information you can make an educated decision based on how risk averse you are.
| 09.25.13 @ 00:27
This has been a repeated question by my borrowers over the last 15 years and it is a great question. The general sentiment in today's market is that rates are on the rise. The specifics are complicated but based on the economy coming out of the doldrums, the government will soon stop artificially holding down rates and they will presumable rise and when they do it will be rapid. My advice is to either lock in now or get your mortgage in a position to be ready to be locked at any moment. Then if your Loan Originator is following the MBS market, like all good LO's do, he will know when they are moving and advise you to lock in at that time.
Remember, predicting where rates are going is similar to predicting the stock market...it is very difficult. Following the MBS market helps us to see trends but they won't predict exactly what will happen next.
So, if you can stomach the thought of losing an 1/8th or a 1/4th for the potential to get a lower rate then play the market assuming you have a knowledgeable LO. If you are a risk averse person my advise is to lock in now and stop worrying about it.
Good luck! | 09.25.13 @ 15:40
All good points above, particularly using a loan officer who tracks MBS trading in real time, and who understands the factors that influence rates. Shorter term locks are priced better than longer terms, so if the market stays flat, and you end up doing a 15 day lock compared with a 30 or 45, you "won". Of course, if rates worsen, you "lost". It all boils down to individual risk tolerance, the time remaining until closing, and your comfort level with your loan officer's ability to monitor rate markets. MBS Live is the tool I've used for 6 years to track real time MBS trading, and it's been an invaluable tool to help me advise my clients. | 02.06.15 @ 05:17