QUESTION: I am buying a new home and I am trying to figure out when to “lock” in my mortgage rate. Would you lock in the rate now or what until closer to the closing date?
ANSWER: I recommend locking in the rate today. Mortgage rates move up and down in reaction to up and down moves in the rate on 10 year U.S. Treasury rates. While no one can foresee the future on exactly how interest rates will behave there are at least two compelling reasons to believe these interest rates will move higher in the coming months: (1) Investors will demand higher interest rates in the face of the inability of the politicians in Washington to solve our national debt problem and (2) The FED has indicated in it vague language the QE III may not be implemented which removes a large buyer from the market.
Feel free to contact me if you or someone you know has this type of situation.
Financial Planning advice presented here is general in nature, and individual circumstances make applying these general rules tricky; thus, the above answer cannot be applied to all circumstances because the slightest variation could cause a different outcome.