Mortgage Rate Options - Which rate to choose

[PhillyPhan]

I am being offered the following rates and need to make a few decisions.

1. I need to decide if I should lock in at 45 vs. 30 days. Closing is 8/7, so just another 6 days or so and the 30 day lock rates are available.

The options as I for a 45 day lock are as follows.

2.875% w/ .375 in pts ($960) for a monthly payment of $1062.12 which comes to an APR of 2.991%

3.00% w/ -.25 pts which provides a credit at closing of $640 and amounts to a payment of 1079.31 which comes out to an APR of 3.088%

When I look at the amortization and factor in the difference between the two ($1600), the breakeven point looks to be right at the 4th year.
We will most likely be in the property for at least 7 years.

The 30 day lock numbers are the following

2.875 w/ .25 pts ($640) for a monthly payment of 1062.12 which comes to an APR of 2.981%

3.00% w/ -..375 pts which provides a credit at closing of $960 and amounts to a payment of 1079.31 which comes out to an APR of 3.088%.

Which of these options would be the best given the assumptions that we stay in the home for at least 7 years?

Should we ask to move up our close date to lock in the 30 day rates? Seller has mentioned they would have no issue with this and as of today it would only be a change of 4 days.

Thank you!

[dandinsac]

In 2013, I paid a bit more to lower the interest rate to 3.75% on a house purchase. I’m still in the same house, so it didn’t matter too much.

This year I refinanced at no cost to 3.25%. I plan on doing another refinance in the fall if I can get another 0.25 - 0.5% off.

Without knowing anything else, I would do the higher rate, no cost mortgage. If interest rates continue to fall, you can use that extra money to help refinance. Getting an extra $320 to move the closing date is great unless it is a hassle or costs you more to do that.