Posts Tagged ‘low interest rates’

Lock and shop with rate float down

April 25, 2017

Last time we discussed the competitive market for home buyers. I suggested getting underwritten prior to making an offer on a home. That way the offer can say the buyer is “approved” and can close in about two weeks (only need the appraisal!). When I talk about this option with clients, they also ask about whether they can lock the interest rate. Most lenders/banks prefer a buyer be under contract to purchase a home, but that isn’t the case with Lock and Shop.

Buyers can lock in their interest rate today without a purchase contract, and then go out looking for a home. The program typically works like this:

  • We start the loan process as if we have a contract to purchase a home.
  • We submit the loan to underwriting for approval, and can lock the borrower into a 60 day rate lock.
  • This provides plenty of time to find a home, get under contract, and complete the closing

This is a great program for buyers. They can go ahead and get underwritten for a home purchase. They can also lock in a rate now, and not feel so pressured to find a home before rates could possibly get worse. With a 60 day lock, there really isn’t a rush on either side of the equation (finding a house and then getting loan approval). 60 days is more than enough time for both!

On top of that, there is a one-time FREE float down on the rate lock. The window to use the float down is within 30 days of closing (or rate expiration) and 8 days prior to closing (or rate expiration). If interest rates have improved by 0.250% or more, the rate can be lowered to the current market. That’s it. No fees and no tricks. There is a roughly 3-week window to use the float down, and rates must be improved by 0.250% or more.

If you’d like to learn more about the lock and shop program for a home purchase in Georgia, you know where to find me!

MMMM….Mortgage Cake

June 5, 2014

Blog Header

When you are looking to buy a home, one primary consideration is, “What interest rate will I pay for my mortgage?”  I’ll borrow the saying “have your cake and eat it too” in order to explain.

Truth is mortgage interest rates fluctuate daily, and can change multiple times in a single day.  So when do you lock the rate? Now you’re faced with a dilemma and must ask yourself:

  • “If I don’t lock and rates go up, my monthly payment will be higher.”
  • “If I lock today and rates go down, I will miss the chance to have a lower monthly payment.”

This is one case in life – when working with the right lender – you can actually have your cake and eat it too!  Get out your fork and napkin while I explain.

The base layer of your cake is a quick description of a rate lock.  You lock the interest rate for the period of time you need to close on your home.  Options include 15, 30, 45 days, etc.

The next layer of your rate lock cake is the fact that when you lock, your interest rate will not increase even if market rates rise significantly before you close.  You are locked in and won’t pay more as long as you close within your lock window.  You’ve just addressed the first horn of your dilemma.

Now the sweet icing on your rate lock cake…some lenders, like the ones we at Dunwoody Mortgage represent, offer interest rate “float down” options.  If rates improve before you close, you can have the opportunity to “float down” to a lower mortgage interest rate at no cost to you – dilemma solved!!

Financing your new home purchase with Dunwoody Mortgage can protect you against rate increases and decreases. Your dilemma is solved as you don’t have to worry about when to lock OR what if rates improve!  If you are looking to buy a home in the state of Georgia, and want this kind of interest rate security, then give me a call.  I would love you help you have your cake and eat it too.

blog_footer_RShaffer1

“Should I buy?”

October 11, 2011

I get that question a lot these days. “Should I buy a home?” It is a valid question to ask. Some may be concerned about the stability of their jobs. Others may be concerned about whether or not we’ve hit “the bottom” in regards to housing prices. I do understand the reasoning behind those concerns, but let’s look at it from another angle.

The chart above shows the correlation between purchasing power and home values. Currently, we are siting in one of the best periods for buying a home – low interest rates (purchasing power) with lower home values. This combination is very tempting, but still some are holding back. Why? It seems people feel rates are going to stay low forever. That isn’t the case. Interest rates are like stocks… sometimes they go up/down in price for unexpected reasons. For instance…

This time last year, interest rates were at the same point they are now. In the high 3’s. Then around the start of November, interest rates began to climb. Before the end of December (about a 6 week period), interest rates went from the high 3’s to the mid 5’s. It was an unexpected jump and put some people’s home buying/refinancing plans on hold.

What kind of a difference does that jump in rates make? If you qualified for a principal and interest payment of $1,000 each month, then you’d be able to purchase a home up to $250,000 with a 20% down payment while rates remain at their current levels. With rates in the mid 5’s, that same monthly payment of up to $1,000 would cause the purchase price to decrease to $220,000. That is a loss of $30,000 of purchasing power.

In short, the question you should be asking yourself is not “should I buy?,” but “what am I waiting on?” If you plan to remain in the area you are currently residing for the next few years, this is one of the best times ever to buy a home due to the combination of low rates and lower home values. If you are looking to purchase a home in the state of Georgia, I’d be glad to help you get started!