Should I lock the current mortgage rate for 6 months and bet?
My mortgage broker was offering to lock the current rate (investment, 6.4%, no point) for 6 months, at the cost of 0.5% of the mortgage amount. I am thinking about whether I should take that bet or not - say I pay 2k to lock 400k of mortgage, and wait until the end of the year to buy the dip.
Hi fellow BPers, Would this be a good idea or a terrible one? Seems to me that the interest rate is just gonna go up and up, and the market is cooling down visibly now.
Quote from @Jack Jiang:
My mortgage broker was offering to lock the current rate (investment, 6.4%, no point) for 6 months, at the cost of 0.5% of the mortgage amount. I am thinking about whether I should take that bet or not - say I pay 2k to lock 400k of mortgage, and wait until the end of the year to buy the dip.
Hi fellow BPers, Would this be a good idea or a terrible one? Seems to me that the interest rate is just gonna go up and up, and the market is cooling down visibly now.
What if there is no dip?
Is this new construction?
If by the time closing comes rates have dropped you can see if your lender will adjust the rate or go close your deal with another lender.
Quote from @Rodney Sums:
Quote from @Jack Jiang:
My mortgage broker was offering to lock the current rate (investment, 6.4%, no point) for 6 months, at the cost of 0.5% of the mortgage amount. I am thinking about whether I should take that bet or not - say I pay 2k to lock 400k of mortgage, and wait until the end of the year to buy the dip.
Hi fellow BPers, Would this be a good idea or a terrible one? Seems to me that the interest rate is just gonna go up and up, and the market is cooling down visibly now.
What if there is no dip?
Is this new construction?
If by the time closing comes rates have dropped you can see if your lender will adjust the rate or go close your deal with another lender.
No, I haven't signed any contract for new construction. In another word, it's a naked put where I am betting that there's an interest hike (plus a possible dip) in 6 months :) The premium is 0.5% mortgage amount and worse case I lost that amount.
What I am not sure of is whether this could be a good bet to start with, or it's merely a terrible idea for an experienced investor!
Quote from @Jack Jiang:So you pay a fee up front to hold the rate for an extended period of time for a property you aren't under contract for correct?
Quote from @Rodney Sums:
Quote from @Jack Jiang:
My mortgage broker was offering to lock the current rate (investment, 6.4%, no point) for 6 months, at the cost of 0.5% of the mortgage amount. I am thinking about whether I should take that bet or not - say I pay 2k to lock 400k of mortgage, and wait until the end of the year to buy the dip.
Hi fellow BPers, Would this be a good idea or a terrible one? Seems to me that the interest rate is just gonna go up and up, and the market is cooling down visibly now.
What if there is no dip?
Is this new construction?
If by the time closing comes rates have dropped you can see if your lender will adjust the rate or go close your deal with another lender.
No, I haven't signed any contract for new construction. In another word, it's a naked put where I am betting that there's an interest hike (plus a possible dip) in 6 months :) The premium is 0.5% mortgage amount and worse case I lost that amount.
What I am not sure of is whether this could be a good bet to start with, or it's merely a terrible idea for an experienced investor!
I hadn't heard of that before. So if this is possible, are you locked at the same rate if rates go down or do you get the benefit of a decreased rate within the six months too?
Quote from @Rodney Sums:Well, the broker said that if the rates go down, I can float down to better rates - but I won't say for sure until I see the loan agreement.
Quote from @Jack Jiang:So you pay a fee up front to hold the rate for an extended period of time for a property you aren't under contract for correct?
Quote from @Rodney Sums:
Quote from @Jack Jiang:
My mortgage broker was offering to lock the current rate (investment, 6.4%, no point) for 6 months, at the cost of 0.5% of the mortgage amount. I am thinking about whether I should take that bet or not - say I pay 2k to lock 400k of mortgage, and wait until the end of the year to buy the dip.
Hi fellow BPers, Would this be a good idea or a terrible one? Seems to me that the interest rate is just gonna go up and up, and the market is cooling down visibly now.
What if there is no dip?
Is this new construction?
If by the time closing comes rates have dropped you can see if your lender will adjust the rate or go close your deal with another lender.
No, I haven't signed any contract for new construction. In another word, it's a naked put where I am betting that there's an interest hike (plus a possible dip) in 6 months :) The premium is 0.5% mortgage amount and worse case I lost that amount.
What I am not sure of is whether this could be a good bet to start with, or it's merely a terrible idea for an experienced investor!
I hadn't heard of that before. So if this is possible, are you locked at the same rate if rates go down or do you get the benefit of a decreased rate within the six months too?