Yep, we locked in our rate the middle of November. Then heard last week that they are thinking rates will drop a bit around the 19th of December. I'm not much up on all of that, so I'm just hoping for the best.

I must say dh and I are not into "gambling" at all, and it was a difficult decision to lock that rate! :o~

I think our rate went up an eighth of a point yesterday, but I am gambling the prime will go down after the Feds meet on December 11th and the mortgage rates will follow. I just can't see them going up with the real estate market so bad.

Teach2007, who told you the rates will go up? Educated guess or just someone just plain guessing. I am surprised you locked in so early. We are closing December 21st and I don't plan on locking until after the Feds meet. I am a gambler, though.

Locked on 28 November at 5.875% in NC. Broker thinks it
may go to 5.75% (30 year conventional with 1/3 down).

Minnt, I locked in because Wednesday the rate was 5.75 and Friday it was up to 5.85. I got scared and went ahead and locked. I doubt it will drop drastically. I figure anything below 6 is great. Three weeks ago I was quoted 6.25. My banker said the investor she is dealing with locked in 1000 loans Friday because it went up slightly. We'll see what happens!

Since this thread is about interest rates do you mind me throwing out if anyone has explored construction to perm loans? My DH works for a bank and we have our current mortgage through them, we have talked with them, but I know there are other banks out there and wonder if anyone has already done the legwork on rates and terms.
TIA
comfortdog

Thanks for the info Teach07. My broker called me on Friday and wondered if I wanted to lock in. I am still betting it will go down, but I agree, probably not by much. We started this 6 months ago, with rates over 6, so anything under 6 will make us happy.

comfortdog - I am not sure what your question is, but we are doing a construction loan to a conventional. I am going with WellsFargo Mortgage, because we have a relationship with the broker already and she is bending over backwards to get us in easily. We have our construction loan with our WellsFargo bank, which is a separate entity from WF Mortgage.

MINNT: There are construction to perm loans that only require one closing as opposed to doing two separate loans which would be the construction loan and the conventional loan. Are you paying for two closings? Were there advantages to doing it that way?
comfortdog

My banker didn't charge me any closing costs for the construction loan. I am free to go get a mortgage anywhere. I will have closing costs for the mortgage, but my broker is being pretty competitive with how much she is charging me. We have a large loan in an area that doesn't see many loans of this size and she doesn't want to lose us.

I got lucky. We locked in at 6.125% sometime in late September. The day of the closing, our bank's rates had dropped to 5.875% so I asked my lender if he could do anything, but he was out of the office for 2 days due to personal reasons and so we went ahead and closed at 6.125%. Then on the 3rd day after we closed/signed the paperwork, rates went to 5.75%. This was the final day of the 3-day rescission/cancellation period. I finally reached my lender and told him I am interested in cancelling my first loan if the fee to re-lock at 5.75% was reasonable. They said it would likely be about $2,000, but would get back to me later in the day with an exact quote.

Well, they got back to me with great news! 1) they would let me cancel and re-lock on a lower rate, 2) the re-lock fee was only $250, and 3) they could offer a rate of 5.5%! Unbelievable!!! The kicker is that because of the lower interest rates, our new closing costs were actually lower. So even after the $250 fee, they actually gave us a check back for >$300. We re-processed our loan for 5/8% lower and they essentially paid us $300 to do it!!! SWEET!

That is UNBELIEVABLE, Buzzsaw!!! You don't hear stories like that everyday!!! I bet your feet didn't hit the ground for a week!! That is awesome!

buzzsaw,

wish you could work your magic on my loan. :O) Glad to hear you got such a good deal.

You all are getting some good rates. We are business owners with great credit. I'm bummed that we didn't get better rates than we did. :o~

Totally blessed,
We are in the same type of boat. I think these interest rates might be conforming rates. (i.e., under $417,000.) I've seen your house and you might have a jumbo loan, which is a completely different creature altogether. We have a construction loan which will convert to a fixed 30 year with a cap rate of 8%. Right now, it's at 7.5% if we were to convert. The good news for us is that with the short term interest rates going down, our interim payment has dropped a bunch. We're self-employed with great credit too. It's just the mortgage meltdown that's killing us all.

The Feds meet today and if prime goes down, which everyone says it will, mortgage rates could go down even more. We are two weeks from closing and have to lock in at least 5 days before closing. We have a few packages to consider and because we will be nonconforming (more than $417K), we will be crossing our fingers and toes for the next few days. We have great credit and good jobs, so we will have no problem qualifying. Right now, it is just a matter of what our interest will be for the rest of our lives, as we figure interest rates will never be lower than now and thus, we won't be refinancing ever. I am about ready to implode with the bits and details of the house going on, on top of this huge decision on our mortgage. I need a vacation!

Regarding the FED rates, my lender told me this...

Interest rates are all hedged on future returns anyway. Thus if it is anticipated that the Fed will drop the prime rate the market will react accordingly before the meeting. I witnessed this very thing in September when the rates were dropped, the mortgage rates actually went up for what we could lock in on because the market was expecting a bigger cut.

Morale of the story - don't make the assumption that the lowest mortgage rate will occur the day of (or day after) the fed lowers the rate. You might be unpleasantly suprised.

Long term interest rates go up or down depending on what bonds do. When bonds go up, interest rates go down and vice versa. Today, for instance, the fed lowered the prime, bonds rallied and long term interest rates went down also. My DH is a mortgage broker. I am required to know this information. :) So he says.

Buzzsaw- did you ever say whether you have a conforming loan (under 417K)? That does totally change everything. We need a jumbo loan also- somewhere in the range of 650-700K. I have found the rates get really bad at that point. We have great credit and can put down at least 20%. The best rates we have seen so far are for a 5/1 arm. I hope they do go down again.
comfortdog

Of course it is conforming. Practically a 1% increase for jumbo's. You can also take out two loans; one at 417 and another 'home equity' loan or line of credit for the balance above 417.

Here is the scoop from my mortgage broker on Tuesday, before the Feds met.

$XXX,000 (80% of value) plus $XX,000 2nd home equity line of credit - interest only. 1st mortgage at 6.625% fixed 30 year, line of credit at 8.25% adjustable rate (runs with prime) and interest only payment.
$417,000 first mortgage at 5.875% fixed 30 year. 2nd home equity line of credit at $XXX,000 at 7.625% - interest only adj rate (your rate is prime plus .125 - so could go down after tomorrow).
Nonconforming $XXX,000 with no mortgage insurance. Rate 7%.
Nonconforming loan of $XXX,000 with monthly mortgage insurance until paid down to 80% rate is 6.75%

I didn't get a chance to talk to her today, but I will tomorrow. The last time the Feds dropped the prime, she went down, then adjusted up, but not totally up, the next day.

Our construction rates (based on prime) are lower than our final conversion rate. Not that I want to keep that rate going. We want to be done!! Our payment has probably gone down $1k a month with the feds lowering the prime rate. Good luck everyone finding a good loan.