To Lock or Not to Lock

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To Lock or Not to Lock

December 5th, 2007 categories: Real Estate Finance

Being relatively knew to blogging, I have tried to think of many ways to talk about mortgages in a more exciting way. So far, I have realized that I have now fallen into a category that I never thought I would: now closer to 40 than 30, with 3 kids, a husband, a mortgage, and yes a dog. However, with this new category comes a healthy desire for stability and security.

And while, I can’t say I have found the secret to adding pizzaz to mortgages, I can offer my commentaries and hope that someone finds them helpful. My comment today is to consider locking in your mortgage rate if you are to close in the next 21 days or less.

Mortgage Rates have hit recent lows once again. The opportunity to lock a 30 year fixed mortgage at or below 6.0% is rare. It is a great time to refinance into a fixed rate mortgage and off an adjustable rate mortgage.

The Fed’s are set to meet again on Tuesday and while no one has a crystal ball, recent comments from San Francisco Fed President, Janet Yellen support Federal Chairman Ben Bernanke’s comments and lead many to speculate the Fed’s will cut rates again next week.

Of course a potential rate cut is great break for banks who will be able to borrow money cheaper, but does this really help someone in the market for a home mortgage?

The answer is a little more complicated. In fact, cheaper money does not always trickle down the the consumer. Often, a rate cut can trigger inflation fears in traders and lead to mortgage rate increases (which is the case in the last two Fed Rate Cuts).

In addition, Automatic Data Processing (ADP) came out with their red hot Employment Report today. While they are not always accurate, their numbers are considered a good barometer of Friday’s Jobs Report. If the Jobs Report follows ADP’s numbers, expect a healthy addition of over 200,000 jobs well over the 70,000 previously expected.

If you are currently refinancing or purchasing a home, it may be prudent to lock in your low rate now ahead of Friday’s Jobs Report and Tuesday’s Fed meeting.

Lysa Catlin
CMC Finance, Inc.
(858) 456-3000

This entry was posted on Wednesday, December 5th, 2007 at 4:30 pm and is filed under Real Estate Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.