Facepunch me for trying to time the mortgage rate market

[Loud Noises]

I'm closing soon on our first house, but I can't help but to feel like we left money on the table by locking an interest rate too soon.  When we originally quoted, at the turn of the year, I was told 4.11% with no points for a 30 year fixed.  I watched events in the financial world and thought rates would be moving lower.  So I eventually locked two weeks later at 3.875%.  But now I can't stop watching the markets and I see I could've locked close to 3.5% with the same lender!  I can't seem to shake the feeling that I've left a ton of money on the table in the form of interest payments, even though I know I should be happy with an historically good rate.

I should add that we have been conservative throughout this process, so we can easily afford these obligations.  I guess I'm just having rate-lock buyer's remorse.

Has this happened to anyone else?  Should I have seen it coming, or do I deserve a facepunch for wishing I could perfectly time the mortgage market, like others do with the stock market?

[Another Reader]

Call your lender and find out how much to get out of the lock and lock a new rate.  And no facepunch on this - you should try to time the mortgage market. 

[Loud Noises]

I close in two days.  I don't think I can do that without moving our closing date at this point, right?

[Goldielocks]

I close in two days.  I don't think I can do that without moving our closing date at this point, right?

Call them, a few lenders provide guarantees to give you the lowest available up until closing day, for just this reason.

Even better, get an offer that you like from a competitor, then call the one you intend to go with.

[Another Reader]

Yes, they would have to redraw the paperwork.  However, I would still call the lender and see what your options are.

[Loud Noises]

Thanks for the ideas.  My lender said that he could give us a new rate but that it would be a new loan and have to go through underwriting again.  We would not close on time for this house and probably lose the property, in this case.  So I've weighed that against the fact that I can't seem to find a truly comparable house at the same price anymore (market is moving up quickly and we have a good deal) and I'm choosing to make peace with the fact that we are going to pay more interest than we could have in an ideal world.

[clarkfan1979]

No face punch here. A face punch is only allowed if you know what was going to happen. Be thankful that it didn't go up. If you have crystal ball that can predict mortgage rates, I would be willing to buy it from you and I will cover your losses on the higher rate. At the end of the transaction, I will also throw in a free face punch.

[rocketpj]

My parents never paid less than 10% on any of their mortgages when they owed money.

We live in a 5000 year low in interest rates.  Locking in anywhere under 5% for your entire term is an epic win by any measure.  In ten years you will either be regretting a few fractions of a percentage (and the cash that implies) or feeling very smug as you need outrageous high rates all around you.

A 30 year term is unheard of up here in Canada - we tend to renew every 5 years (the banks love it if we go for a 1 or 2 year term).  Last summer we locked into a slightly higher rate for ten years for stability reasons, but I wouldn't hesitate to lock in a rate like that for longer if that was an option for us.

[Goldielocks]

My parents never paid less than 10% on any of their mortgages when they owed money.

We live in a 5000 year low in interest rates.  Locking in anywhere under 5% for your entire term is an epic win by any measure.  In ten years you will either be regretting a few fractions of a percentage (and the cash that implies) or feeling very smug as you need outrageous high rates all around you.

A 30 year term is unheard of up here in Canada - we tend to renew every 5 years (the banks love it if we go for a 1 or 2 year term).  Last summer we locked into a slightly higher rate for ten years for stability reasons, but I wouldn't hesitate to lock in a rate like that for longer if that was an option for us.

A key difference in US versus Canada mortgages is the pre-buying of "points" in the USA.  In Canada, you don't do this, instead the cost (fees) are zero if you keep your mortgage to term, but high if your "break" early.  Therefore people don't want terms that are too long as most plan to sell within 10 years.   Getting out of a mortgage early, can cost thousands and thousands of dollars, (I think I received a quote of over $8k to do this once).  On the plus side, there are almost no loan origination fees.

In the US, you can prepay "points" to drop interest over the term on mortgages.   Buying points can cost thousands...    But there is no penalty (usually) to break early, so the disincentive to getting a 30 year term is just potentially a higher interest rate,  which should be compensated by the reduced risk..   You can refinance at will, if the rates drop sufficiently to make it worth it.   

[soupcxan]

If you have crystal ball that can predict mortgage rates, I would be willing to buy it from you and I will cover your losses on the higher rate. At the end of the transaction, I will also throw in a free face punch.

+1. People that think they can predict interest rates are deluding themselves.

[Bearded Man]

This thread makes me feel better. I locked a month ago on a 3.875% rate. That was with the bank buying down the rate. Broker said it's rare that they actually do that. Sad thing is, rates went down but seller wouldn't let me switch lenders. A member here recommended AIMLoan and they had phenomenal rates but I was stuck. So now I'm seeing 3.5% rates and I'm paying 3.875%. They say if it's less than a 1% interest rate change it's usually not worth refinancing. Over the life of the loan it is about 14K more I pay, but...I doubt I will keep the house forever. I plan on 10-31 exchanging to a lower cost of living area when I pull the plug and using the proceeds to buy rentals paid in cash.