Lock or float

[genki]

My offer to purchase a yet-to-be constructed house has been accepted by the builder. The construction will only be ready in 6 months later.

My bank is asking me if I would like to lock the rate at 4.25 percent by paying a premium fee of 1.25 percent of the total cost of house vs 0.25 percent interest rise or let it float.

I was hoping to get some advice based on the current climate. I am a first time home buyer

Thanks

[Dicast]

Can you ask for another bank?

[WallStreetPhysician]

genki wrote:

My offer to purchase a yet-to-be constructed house has been accepted by the builder. The construction will only be ready in 6 months later.

My bank is asking me if I would like to lock the rate at 4.25 percent by paying a premium fee of 1.25 percent of the total cost of house vs 0.25 percent interest rise or let it float.

I was hoping to get some advice based on the current climate. I am a first time home buyer

Thanks

Click to expand...

Let it float and get a lower rate on your mortgage by going to

https://www.zillow.com/mortgage-rates/

Looks like the best mortgage rate listed is 0.40% lower than your bank's rate.

-WSP

[jfoxcpacfp]

genki wrote:

My offer to purchase a yet-to-be constructed house has been accepted by the builder. The construction will only be ready in 6 months later.

My bank is asking me if I would like to lock the rate at 4.25 percent by paying a premium fee of 1.25 percent of the total cost of house vs 0.25 percent interest rise or let it float.

I was hoping to get some advice based on the current climate. I am a first time home buyer.

Click to expand...

Nobody here can predict what will happen in the next 6 months, year, or beyond. That's like asking for a weather forecast months from now; advice based on the "current climate" is strictly opinion. Given that, however, I agree with  Dicast and  WallStreetPhysician that you should keep shopping. "A premium fee of 1.25 percent of the total cost of house" is not a good deal, imo.

[jhwkr542]

Float it.