Short-term - LOCK as trends are showing rates at historical lows and advantage of floating is minimal. If you are closing in 7 - 15 days, I would consider FLOATING, but the markets are volatile, so you should keep vigilant.
Long-term - FLOAT on belief that weakness in the economy will continue supporting the possibility in continued low rates
Click here if you would like to know more or want to talk about your individual needs
Short-term - LOCK as trends are showing rates at historical lows and advantage of floating is minimal. If you are closing in 7 - 15 days, I would consider FLOATING as there has been a further flight to quality this morning providing fuel for better rates.
Long-term - FLOAT on belief that weakness in the economy will continue supporting the possibility in continued low rates
Click here if you would like to know more or want to talk about your individual needs
There has been a lot of hullabaloo lately about homeowners who choose to walk away from their mortgage instead of toughing it out. I am not hear to judge, because I have never been there. I can tell you that any foreclosure has a ripple effect in the community, which has made deals more difficult to close.
One organization that does have a dog in the fight is Fannie Mae and, as of today, they have made their view on the practice crystal clear. Today they announced more severe penalties, read waiting periods, after a foreclosure. Their stated intent is to make options such as loan modification, short sale, or deed-in-lieu of foreclosure much more desirable.
While there will be consideration for homeowners who truly faced extenuating circumstances, defaulting borrowers can now expect to wait 7 years after a foreclosure before being considered for a Fannie Mae loan. This represents a 2 year increase over the previous policy and it is meant to encourage homeowners to work with their servicers to prevent the default.
So, now hopefully you have enough understanding of the market conditions that contribute to mortgage pricing and securing a good rate. Stocks are down and investors are fleeing to the safety of the bond market, which has driven down mortgage lending rates. When this happens everything points to a lock. Keep in mind the timing. Will locking in a rate now give you enough time to close your loan? Because mortgage rate locks are not valid for an indefinite period of time, herein lies the second and equally important aspect of locking your loan.
The Federal Homebuyer's Tax Credit has been extended for servicemen and women, as well as federal employees who served abroad in 2009. The extension is for one year and ends for military and federal employees who served abroad for at least 90 days from January 1, 2009 to May 1, 2010, as well as their spouses.
The rate lock conundrum is the basis of angst for every borrower that I have ever had. After all, this is a choice that is going to have an effect on your finances for a considerable amount of time. On the one hand, there is desire to secure the best possible rate, which requires exposure to risk in an effort to time the market perfectly. On the other hand, there is the desire to eliminate uncertainty by simply choosing a rate that you can afford to ensure the viability of your transaction. This may initially seem impossible. When you understand how the market determines rates, however, you can strike the needed balance between these opposing requirements and secure a favorable rate.
I am often asked should I lock or should I float by my clients. This is a very difficult question as the determining factors that define rate movement have their own unique drivers tied to overall economic sentiment. Understanding one simple relationship is the key to the lock decision and, actually, most clients can make an informed decision in their own right.
Let me begin by saying that interest rates are important to any real estate transaction. To say otherwise would be naïve. But too many times rate emerges as the primary or even the single driving factor in the decision of which lender to choose. This low cost approach can be a very perilous road when taken with complete disregard to the overall requirements for the transaction and the individual delivering the service.
