Mortgage Fearbuster 8

Posted by  on Apr 08, 2010

Q: My wife and I are getting mortgage quotes,, and are losing sleep! She wants to lock in a rate and make an offer on the home we want, but I'm thinking we can hold out for the lowest mortgage rates. I want a good deal on a house, but don't want a divorce Any advice?

A: Focusing on rates alone may cost you more in loan fees, and it could cost you the home you want. If you want peace of mind, it may be best to get approved based on current rates, and lock in your rate.

Q: I'm making an offer on a condo, and my mortgage broker says I should "lock in" my mortgage rate. What does that mean, and should I do it?

A: Locking in a rate means that you pay a specified amount (usually expressed as "points"--one point is 1% of your mortgage amount) to lock in a favorable rate for a specified period, typically 30-60 days. This can protect you from rate increases occurring while your mortgage loan is being approved. A "float-down" is a provision attached to some locks that allows you to end up with a lower rate if rates drop by the time you close on your home.

Q: I'm shopping rates for a 30 year FRM, but notice there is not much difference in mortgage quotes. Why shop if the rates offered are about the same?

A: If you're looking for the lowest mortgage rates, you'll find them by shopping for adjustable rate mortgage loans (ARMs), or hybrid ARMs that offer a fixed rate for a specified period of time before adjusting. As for 30-year loans, even a small percentage makes a big difference in what you pay over the life of your loan. So the question isn't "Why shop?" As easy as it is to do online, the question is, Why not?"


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