Question regarding Mortgage Interest Rate: when to pull the trigger?

In My Humble Opinion
1

Hi all

We’re about to purchase our first home. Everything’s all set to go, and we’re currently looking at an interest rate at about 5.5% on a 30 year fixed rate.

Our broker is telling us that (obviously) it’s a pretty volatile market right now, and as the market has been flooded with mortgage-backed securities things are bouncing around quite a bit.

We’re looking to close in mid-July, and we can get a rate lock at probably 5.5% tomorrow a.m., good for 30 days. As of this post the rate would be 5.75% but judging by the climb in basis points he says he expects 5.5% again in the morning.

BUT

The Fed will be making an announcement at noon eastern time tomorrow that, according to our broker, could mean a spike in either direction depending upon the tone and information released in the announcement. He says he really couldn’t hazard a guess as to whether the rate will rise or fall, just that there will be some movement associated with the announcement.

We’ve decided that 5.5% is a good interest rate, and while we’d obviously like to see a lower rate, we’re not sure whether to:

lock in our rate in the morning before the announcement

or

gamble on a downward movement of the rate.

What say ye, Dopers of a financial bent?

Looking for informed opinion, not hard answers. I guess I’d like to get a sense of what some others might do in this situation.

Thanks in advance!

2

Bankrate expert thoughts:

3

Sigh…I don’t have an answer for you, but my husband and I have the same dilemma. Almost exactly the same. You aren’t him, are you? :wink:

The bank let us lock in about three weeks ago, when the volatility first started. We got a 5.625% with 5/8 points. They’ll let us re-lock once more, but then that’s it. I think we’ll wait until 15 days until closing for the re-lock (beginning of July), since rates are supposed to drop with 30 and 45 days before closing. If we hadn’t already locked once, I think I would agree to lock at 5.5%. In perspective, that’s a great rate, right? I just think of what they were in the 80’s when my parents bought their first house, and thank my lucky stars and good credit.

Of course, the real right answer is that the best time to “pull the trigger” would have been a month ago! Sigh…