Another question for the mortgage experts: lock in rate now or not?

[AmyAnne]

A family member is closing on a house mid to late October (it's a new construction, so it's not entirely set at this point when it will be done). The loan is very straightforward: 20 percent down, 15-year fixed rate. The interest rate can be locked in 30 to 45 days before closing. Interest rates seem to be falling slightly lately (at least since the Federal Reserve said it wasn't raising rates). What is a rate that would make you say, "Lock that in now!" ?

 

[seashoreCM]

I don't think you have a choice now.

Since the house is not finished, there is no telling it will be done in 45 days.

Wait until the only thing remaining is the mortgage processing time and then ask the question.

 

[DisneyMandC]

Not sure how it works with construction closings, so PP might be right, but we're closing on our home Monday and our interest rate dropped .5 from when we first got prequalified to when we actually signed with the lender, and that was just a period of a couple weeks.

 

[havaneselover]

If it was an existing house, I would say lock. The 10-year yield which drives mortgage rates is ridiculously low and I would expect it to start moving up.

 

[diznee25]

My DH and I are going through the same situation. Every home builder may do things differently, but here's our experience:

Our home builder told us once the roofing was completed, that we'd be 60 days from completion. So on Aug. 10th roof was done, and we got our (estimated) 60 completion date, and our mortgage lender locked in our rate. The 60 day notice was pretty spot on. We close on Oct. 7th.

So I'd think there should be a point in the building process where the home builder can give you a completion date. More than likely, mortgage lender won't lock in rate until getting the green light from the home builder.

Hope this helps,
Michelle

 

[HM]

Ask if the locked rate can be extended in the case of non-completion in time.

 

[diznee25]

Whether the rate can be extended is up to the mortgage lender. Our lender said she was only willing to extend our locked in rate if the home builder was only a few days behind schedule. Anything over that, and we would have had to lock in again.