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When to lock rate for Perm Financing?

Posted by txaggieinargyle (My Page) on
Wed, Aug 1, 12 at 16:04

When did you lock your rate to convert from a construction loan to permanent Financing?

I have an option to lock in at 3.5% (30 yr fixed) for a 75 day lock. I am probably 45 days from completion on the house.

I am staying with the same lender that did the construction loan so I took advantage of their "one Time close option" on the original loan. My only closing costs on this loan will be about $400 conversion fee. No points no origination.

Will rates get better? How much? I know they are at an all time low right now.


Follow-Up Postings:

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RE: When to lock rate for Perm Financing?

They aren't going to get much better than 3.5%.
Too dangerous to float that long out - 45-75days.

I would just lock & call it a day.
My conversion is $750 so you are getting a good deal @ $400


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RE: When to lock rate for Perm Financing?

Sorry meant to say that too dangerous to float as you get below 45 days & definitely 30 days.

Great rate btw- you are basically getting the best execution rate!


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RE: When to lock rate for Perm Financing?

Crystal balls have never been know to be very reliable.


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RE: When to lock rate for Perm Financing?

I locked in, don't know what i was thinking.


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RE: When to lock rate for Perm Financing?

You did fine.
Relax & enjoy the new house to come!


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RE: When to lock rate for Perm Financing?

Fantastic rate! I'm jealous!

Can I ask what bank you used?


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RE: When to lock rate for Perm Financing?

I would say locking it wasn't a bad move but at the same time who really knows. People say that rates can't get much lower but the same people were saying the samething when rates were in the 5's, the 4.5's, 4.0's, 3.5's and so on. Rates have been down to 0 in Japan, a little different dynamic but thats another convo for another forum. We could have gotten 3.5% but locked in at 3.75% with builder paying closing cost so we are ok with that. I guess its a gamble you have to feel comfortable with. We were happy when we folded so I guess thats all that matters (unless I see rates get in the 2's) :)


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RE: When to lock rate for Perm Financing?

I think I heard somewhere that cost to the bank is about 3.25% So, I think if we see in the 2's, for a 30 yr fixed rate, the world will be about to end (or at least banking).


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RE: When to lock rate for Perm Financing?

Agreed kirkball, we'd have bigger problems if rates get into the 2's.
When no1 is making or spending money...eeek!


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RE: When to lock rate for Perm Financing?

We used a local bank

Town square mortgage in southlake, tx


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RE: When to lock rate for Perm Financing?

Ah, I'm jealous of everyone on GW who has small local banks willing to do construction loans, especially ones that convert to a 30 year mortgage!


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RE: When to lock rate for Perm Financing?

Laura - you could move to somewhere with a small local bank LOL


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RE: When to lock rate for Perm Financing?

:) Hmm... Let me think about it!! ha


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RE: When to lock rate for Perm Financing?

From my understanding the spread from the 10 year T bill is very high right now so there is actually some downside potential.

Of course the T bill has risen a lot recently from all time low of 1.38 to 1.56. Germany has been as low as 1.1% this month and Japan last I saw was .75.

But the T-bill and rates question is a little bit of slight of hand anyway. Banks sell the vast majority of mortgages to a quasi government agency anyway. They can make money on the fees and be happy. The rate that Fannie Mae pays can be as close to zero as the government wants so they can make money on 1% loans in this environment. For a while....

Certainly the rates can be 2.5%. When Greece leaves the Euro, I would bet we will see rates hit new lows. The upside potential on rates is very low.

Now an election result could change anything.


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RE: When to lock rate for Perm Financing?

Laura12 - I used a national bank.


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RE: When to lock rate for Perm Financing?

gaoonmymind - what bank did you use?


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