If you've been a reader of this blog for a while, you know that I've had a history of commenting on mortgage interest rates. The main reason was that I was in the midst of building a house and was watching to determine at when I should lock in my mortgage rate for the next 30 years. Well I'm happy to say that the research paid off.
Let's go back in blog history here and see what happened. I started really watching the rates about a year ago when we started doing the math to see if we could afford to build a house. At the time that I was crunching numbers with the bank (May 2007) the interest rate for a 30 year fixed mortgage at my lender was 5.625%; which I considered to be a decent rate. By the time we got ready to build, the rates had risen to 6.25% which was a substantial increase. I wondered if there was a
correlation between gas prices and mortgage rates since gas prices had been steadily increasing at that time as well (doesn’t seem to be now).
By early July, I stated in a
blog post:
I fully expect to interest rates to come down the second half of the year here. Actually, I've already seen a little bit of a dip.
I knew our build process wasn't supposed to be done until the end of January, 2008, so at this point I was just watching to try to identify trends. Well, interest rates DID start to come down, slowly, throughout the entire second half of 2007.
By the time January hit, I was really watching hard. I was now in the 30 day lock range and was just waiting for a good rate. One day in mid January, a 5.375% became available. I had only seen the rate this low 1 time in the past 7 month, so with 3 weeks until closing, I locked in. I was pretty happy with this rate considering it had come down from 6.25% since we started building.
However, over the next couple weeks, it would inch even a little lower. Then, 2 days before my closing, the rate at my lender took a huge dip to 4.875% (with no points and no early payment penalties)! I was beside myself. I called the bank to see if I could switch even though I'd already locked in. I was surprised to find out that for a $400 flipping fee, I could switch. The $400 would be made up in no time by the lower monthly payments. This switch also moved the closing back a week, but it didn't really matter because they still let us move in on time.
Now, I see that within that past 3-4 weeks, mortgage rates have risen drastically. They are currently 5.75% at my lender. On the day of our closing we were told that the 4.875% was only available for about 3 hours! I guess watching the rates for a year paid off. I was able to predict the drop at the end of 2007 that led me to an ideal time to lock in a rate.
Researching in this way could help you get a low rate as well.
