Posted: Thu Jun 26, 2008 11:26 am Post subject: Buying down these rates?? yea or nay
I started my loan with a 6.25% or 6.50% (I think) rate buying down to 5.75% paying about a rough estimate of $4700 for 3 pts with BofA in May @ $863 monthly. Today's rates (06/26/0 are up and I'm at 7.25% buying down to 6.25% @ $5200 @ $924 per month. My question, should I wait and ride it out 5 days till I close on 07/18 or should I quit stressing and LOCK my rates? I know it's only a difference of $61.00 p/month @ $732.00 p/yr but if I can save more I would.
Knowing when to lock is a hard question. You have to be the one to make that decision. Are you happy with the rate? What type of loan is it?
Brian _________________ Licensed Broker
http://www.aimwithfocus.com
Need quick advise email or PM I am always glad to help
The rates have increased to some extent this week it has deceased a bit (30 year FRM 6.27% today from 6.28 % and 15 year FRM 5.84 today from 5.88% last week). So you can wait a bit a see whether it comes down again or not. It may happen that the rates may increase further. So if you are happy with the rate offered to you and if it is affordable then you can go for it.
I went ahead and locked my rates at 6.25% and bought it down 3.329 points with $5009.50, the way I see it I’m still saving in the long run because I’m planning on living there for a long while. And plus, I spoke with a friend’s financial advisor and was told rates will not be any lower, and if it did, wouldn’t make any difference, I was only looking at a $20-$40 differences. So, I locked my rates as of yesterday. Now I don’t have anything to worry about. Since BofA has all my documents I will also be closing 2 weeks early. =)
I give THANKS to this website and to all the professional advice I have received during my emotionally frustrations moments and mortgage needs. This is by far the most informational site on the web. I will highly recommend to families and friends.
ULCH - would like to explain your position? That is a pretty bold statement to make without backing it up? _________________ Licensed Broker
http://www.aimwithfocus.com
Need quick advise email or PM I am always glad to help
Sure Brian1. I'll explain. For simplicity we will compare the original scenario of 6.25 and 5.75 with a loan amount of $150,000
5.75% payment is $875
6.25% payment is $924
The savings is $49/month. The cost is $4500 to get the 5.75%
4500/49 = 92 which is how many months the loan must be kept in order to break even on the $4500 investment into a lower rate. 92/12 = 7.66 years
Which is how long the loan must be kept in order to break even.
Consider that the average loan is kept 3-5 years(either refinanced or home is sold.) Which is why I think paying points is a poor financial decision. BTW I did not take into consideration inflation or opportunity costs. Which makes paying points even worse investment.
Sometimes it makes sence to pay points but make sure you are going to come out ahead in that transaction. Usually first .25 buydown on the rate is pretty cheap but it increases exponentially from there. So be carefull I'd say if you plan to be in home 10+ years look at the buying down option. As far as locking the rate find what you cofortable with and go with that. Waiting is always a dangerous game. _________________ Eugene Volovik
Branch Manager
Team USA Mortgage
612-481-3127
Conventional, FHA and Commercial Lending
ty_lees
are up and I'm at 7.25% buying down to 6.25% @ $5200 @ $924 per month. My question, should I wait and ride it out 5 days till I close on 07/18 or should I quit stressing and LOCK my rates? I know it's only a difference of $61.00 p/month @ $732.00 p/yr but if I can save more I would.
