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Should I Lock or Should I Wait?

When buying a new home or refinancing, how will I know when to lock my mortgage rate?

“Interest rates rise like a rocket and fall like a feather.”  This old axiom holds a lot of truth.  Generally speaking, rates tend to fall in a poor economy and rise in times of prosperity.  But more to the point, it takes a long time for rates to fall while they tend to rise very quickly when conditions change for the better.    While it’s hard to predict what interest rates will do from day to day and from week to week, we do know that in periods of historically low interest rates (like we are in now), it’s far more likely in the short term for rates to jump up than it is for rates to improve (remember, rise like a rocket!).  Economic news and political and world events all affect rates on a daily basis.  I am asked all the time what I think will happen with interest rates, and the truth is, none of us really know for sure.  What I can tell you is that we have been in a prolonged period of low interest rates due to poor economic conditions and once the economy shows signs of improvement, rates will rise – probably very quickly!

Experience has taught me one thing.  If you are in the mortgage market today, whether purchasing a new home or refinancing your current one, lock your rate as soon as you can and don’t look back.  You may not hit the bottom, but you will be very close.