The Lock Debate

Don’t Lock Now…

Actually, You May Want To

Among the more weighty decisions when getting a mortgage is when to lock in the interest rate. Even small fluctuations can affect your monthly mortgage payment, and create a huge difference in the interest over the term of the mortgage. If you or your clients are shopping for a home, here are some realities to shape your decision about when and how to lock in a mortgage rate. The Easterbrook Team can help.  

Rates are near historic lows, but are rising. Many homeowners today will barely, if at all, remember the days when mortgage rates ran into the double digits. In 1981, mortgage rates hit a peak of nearly 19%. Since then, the overall trend has been to declining rates, including in the period since the housing crisis in 2008, when rates have consistently been below 6%. It’s been more than 25 years since the average annual mortgage rate was in double-digit figures, and it was only just so in 1990--at 10.13%.

Because our economy has been improving, rates have been back on the rise again since March 2017, following the first hikes in the federal funds rate since 2015. Further, the Fed chairman has all but announced that rates will continue to rise in 2018, and analysts also predict that will be the case. That makes it unlikely now that you’ll lock into a mortgage, only to see rates drop before the lock expires.

The lock term is flexible. At a time when rates are dropping, it can make sense to lock later in escrow to limit the time in which more favorable rates may materialize. When the trend is reversed, however, as is the case today, there’s a stronger case to lock in early, and for a longer period, rather than a shorter one, to minimize the likelihood that rates will rise during the lock period. The customary rate lock is for 30 or 45 days, but you can also double or even triple that period fairly easily. The longer the lock, the higher the interest rate will be.  We may recommend considering the longer period in the current environment if you have a long escrow – typically over 30 days.  

Peace of mind is priceless.  Another aspect to consider about locking is the fact that every day the loan is not locked, the media is constantly reminding us of the volatility of rates.  This can create a great deal of anxiety.  With all the other aspects of purchasing a home, locking a loan, especially in a rising interest rate environment, can put your mind at ease and help you focus on the excitement of purchasing your new home.

First Day of Spring 2018 – March 20th

During spring, the axis of the Earth increases its tilt relative to the Sun, and the length of daylight rapidly increases for the hemisphere and warming occurs. The warming hemisphere causes new plant growth to “spring forth,” giving the season its name. More fun spring trivia – CLICK HERE.

According to Google, homes that sold in the first half of May were also purchased for about 1 percent more than the average listing, which translates to a premium of about $1,700. The best time to sell a home in the U.S. is between May 1 and May 15.

Fun Spring Art for Kids

Here are 50 fun spring art projects to do with kids – CLICK HERE.