Lock a rate now in Nov or wait it out until December?


My husband and I are building a home, buy buying it with a conventional loan 30 year fixed off of the builder Feb 14th. One of our lenders we are considering will let us lock in at 90 days and the other at 60 days. We are a bit hesistant as we do not know what to expect the rates to do in the month of December. The company with the 60 day lock saves us quite a bit of money on closing. Can anyone tell me what their opinoin is on the market this month versus next month in December? I was looking at trends and they seem similar, maybe slightly lower in December? Thoughts???


Hi Ashley. One of the biggest issues I have run into with long term locks and new construction is that builders do not always finish homes in the time frame planned (for a variety of reasons). Have a construction to permanent loan going now we expected to close in October that will end up closing in December. We’re already extended the lock twice, and those extensions aren’t free. As you’ve seen, pricing on 60 day locks is far better than on 90’s (and 30’s far better than 60’s for that matter). Assuming the market even stays the same, floating until you’re within at least 60 days of closing could save you .5% or so on cost. Prospects of Fed tapering their bond purchases between now and the end of the year are minimal, unlikely rates will rise more than you’ll gain with a shorter term lock. Unless you need to lock far in advance to avoid losing sleep (or if your debt ratios are exceptionally tight and a slightly higher rate could keep you from closing), you probably stand to gain more by waiting than by locking this early in the process. By the way, if you’re asking for lock advice here (rather than discussing this with the loan officer(s) you’re working with), you may want to consider more informed loan officers to assist you. Thanks, Ted

Answered over 3 years ago
Ted Rood
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