- quote -

I agree, I think rates are going to go up. So I called and locked today.
Unfortunately the rate went up from last week to 6.25, but I still locked it. I
don't really care if rates go down from now until I close, but I would be
pissed if it went up.

In article <20040430044641.20216.00000447[at]mb-m06.aol.com> , SizzleMP
<sizzlemp[at]aol.com> wrote:

- quote -

The question is where do you think rates are going to go?

In my opinion, there is only one way for rates to go after being
at historic lows for such a long time. We have seen 4 straight
rate increases, and Greenspan is threatening to raise the federal
rates. 6-1/8 is still a great rate, so I'd take it rather than
risk having it go up even more.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

SizzleMP wrote:

- quote -

Well, it depends on what you are asking. If what you are asking is
whether you will be objectively better off at the end of the deal by
locking in today or not, no one can give you anything but an
educated guess at that one. Arguably the market has priced the
current offering based on its "best guess" of conditions for future,
so there's just as good a chance over the short term (within 60
days) that the rate could be higher or lower than what you currently
have.

What you *should* be asking, though, is what your risk tolerance is
on this transaction. I would suggest evaluating risk by first
looking at "worst case" scenarios for each decision.

Let's say you don't lock in--the worst case there is that rates go
up. While we can't say for sure how much they would be up over
today, you can probably get a fairly good "comfort level" about what
you think the greatest move would be, absent something really
earthshattering happening in the interim. Now look at the impact of
that on your finances and ask if you could accept that result.

Next look at the lock in option--the worst case there is that rates
drop dramatically and you are stuck with this relatively high rate.
Again, you look at how much the rate could drop and what you would
lose. The one advantage in this case is that I presume you have
already decided that the current rate is "workable" for you--so
while you'd be kicking yourself for having given away that extra
interest, you wouldn't be put in a position of having to "stretch"
to make a higher mortgage payment than you had expected.

Then evaluate what you *expect* will happen, considering that what
happens will not be any of these cases (biggest reasonable jump,
biggest reasonable fall, or your expected case), but rather some
other actual result. At that point, you have to make a decision
based on *NONQUANTITATIVE* issues about your risk tolerance about
whether to lock in or not. And you need to understand that if you
do happen to make the "optimal" decision, it's almost certainly
primarily luck and not skill <grin> --as well as accept that it's
most likely, once you *know* what happens, you will find that you
didn't make the quantitatively optimal decision.

Personally, as close as you are to the closing, I'd probably go for
the lock in. It just takes one variable off the table at a time
when there are enough quirks likely to arise <grin> . And once I
made that decision I simply wouldn't worry if rates dropped.

--
Ed Zollars, CPA
Phoenix, Arizona

Well after a brutal April that caused mortgage rates to jump up about 1/2
percent, I have the opportunity to finally lock in today. I have a free 60 day
lock which puts me well within the window of my closing. I can lock a 30 year [at]
6 1/8%. If I would have locked in a month ago I would have gotten it at 5.5%,
but I would have had to pay down a 1/2 point lock fee for 90 days. It all
started from the jobs report that came out April 2 and the rate just started to
go up since then. But whats done is done. And it seems the rates have settled
down a bit. I am not paying points to get a lower rate because I plan to prepay
my mortgage down after I sell my existing house to cut the term from 30 to 12
years.
In any event, my question is should I lock now or let it ride until I close in
mid-June? My main concern is next week when Alan Greenspan meets with the Fed
on Tuesday and when the new jobs report comes out on Friday. If its another
good report, rates could shoot up again. Even if the jobs report is not so
good, I can't see the rate going down that much in a short time (from now until
my closing in mid-June).