August 30, 2015 08:32 PM Eastern
Mortgage Rate Lock Recommendation
August 28 2015
Lock if closing in 7 days:Rates may be heading Up
Lock if closing in 15 days:Rates may be heading up
Lock if closing in 30 days:Rates may be heading up
If you're considering financing or refinancing a home, you'll want to pay attention to current mortgage rates. The decision to lock in your rate at today's rates or float your loan can have financial implications that will last the life of your loan.
Stocks and Bonds
The bond market is up, the stock market is down, but all other economic conditions are favorable this Friday morning, meaning rates are expected to improve roughly .125 of a discount point. The bond market is up 13/32, or 2.14 percent, the Dow is down 57 points and the Nasdaq is down 9 points.
Factors Affecting Rates
The Personal Income and Outlays report was live this morning, and the results are favorable for mortgage rates. Income increased 0.4 percent (which matched the forecasted increase) and spending increased 0.3 percent. Spending was slightly less than what was forecasted, making the data in favor of mortgage rates.
Rate Lock Recommendation
If I were purchasing a home or refinancing, I would choose to lock my rate based on the data above. However, I tend to sway on the conservative side of things and would rather lock in a good rate than risk getting a worse one. What you choose to do, though, is of course up to you.
"Locking" your mortgage means that you and your lender have agreed on an interest rate and price for your home loan. Once your loan is locked, that's the rate and price you get, regardless of what happens in the financial markets. If rates go up, you're protected but if rates go down, you won't benefit either -- you close your loan at the rate you've locked and you can’t change it. Locks have expiration dates ranging from 30 to 60 days or more, and the longer your lock period, the more it costs. If you don't close your loan on time, you could end up paying a higher interest rate.
You can lock in your loan at any time during the process. Until you lock your interest rate, you are said to be "floating" your mortgage. The only rule is that you have to lock in before you can close on your purchase or refinance.
The decision to lock or float your loan can have a long term impact so it’s important you make the right choice. That’s why we offer a quick rundown of the key factors that drive mortgage rates today and everything you need to know.
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