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Chat with the mortgage hombre

By Holden Lewis ·
Thursday, November 18, 2010
Posted: 4 pm ET

I'm going to answer questions about today's mortgage market in a live chat at 2:30 p.m. eastern time Friday, Nov. 19. It'll last half an hour. West Coasters, take an early lunch and log on.

It will be here. You can sign up there now for an email reminder shortly before the chat begins.

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Holden Lewis
November 29, 2010 at 11:15 am

Meg, your question just popped up in my inbox, so I'm answering late. Generally, I think it's best to lock sooner rather than later. Everyone wants to lock at the lowest rate possible. But rates are unpredictable, so locking at the lowest rate is a matter of luck instead of skill.

Because of that, it's best to think differently. Instead of locking at the lowest possible rate, tell yourself that you'll lock at a rate that you can live with.

I think mortgage rates are on an upward trend, so it's better to lock now and not later. You'll be able to find thousands of people who believe that rates will fall over the coming weeks, and they might well be correct. Is it wise to float, and wait to see if those predictions are correct? I know how I would answer that question. How about you?

Holden Lewis
November 22, 2010 at 10:21 am

I don't know the answer to your question, but I hope I can help you think about it more clearly.

Don't think of this as a dollars-and-cents decision. Instead, think of it as a decision that will affect your emotions over the next few years. Think of what scenario would cause you more emotional pain:

Scenario One: You get a 30-year, fixed-rate jumbo mortgage. Every once in a while over the next decade, you check up on rates, just to see if you made the right decision. It turns out that you didn't. It would have been better to get the 7/1 ARM.

Scenario Two: You get a 7/1 ARM, and as the seventh year draws to an end, you realize that you're going to get stuck with a much higher mortgage payment when the initial rate expires. Either you'll keep the ARM and your rate and payment will jump, or you'll refinance and your monthly payment will jump.

Which of those two scenarios sounds more miserable? Which would keep you up nights? With me, Scenario Two would be the more bothersome. But I've known plenty of people who would be bugged more by Scenario One because they would feel dumb.

Another way to think about it is to ask yourself: What's the worst that could happen, and how would that make me feel? And choose your mortgage accordingly.

And promise yourself that, no matter which choice you make, you won't kick yourself in the future.

November 21, 2010 at 3:26 pm

Is it a good idea to get a 7 year arm on a jumbo mortgage or should I get a higher fixed 30 year rate. If I get the 7 year arm I would have paid off enough of the principal to bring it below the 417000 mark after 7 years. But I am afraid that rates might be too high in 7 years and I
can't refi to a low rate. Please help. I am torn between two decisions. I don't know what to do.

November 19, 2010 at 9:39 pm

Last month on 10/28 I was quoted 4.125% for $331 for cost for the rate plus document fees. Today, $331 gets me a 4.375%. My question is should I wait or lock in as soon as possibly before rates increase?

Holden Lewis
November 19, 2010 at 4:16 pm

You should be OK Monday.

Tanya Esselmann
November 19, 2010 at 3:23 pm

where are mortgage rates heading over the weekend? should i push to get a lock today, or will i still be ok on monday?