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.
