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Flat-footed over a big jump in rate

By Holden Lewis · Bankrate.com
Monday, November 15, 2010
Posted: 9 am ET

Mortgage rates woke up on the wrong side of the bed this morning. Fixed mortgage rates are up about one-eighth of a percentage point compared to the end of the day Friday.

What bad news for people who decided during the weekend to refinance this week.

You're asking whether this is a temporary blip or the beginning of a trend. In other words, will rates soon drop back, or will they continue to rise? Or, to put it more bluntly: Should you float (hoping that rates will drop), lock (in case rates continue to rise) or just give up and not refi?

The trend is upward. Rates are rising. If rates fall back the eighth of a point that they rose this morning, they won't stay there for long. On the question of whether you should float, and hope rates fall back, or lock: If you can lock at today's rate and save lots of money, I think you should take your winnings off the table by locking the current rate. On the other hand, if you don't mind living with your current payment -- if refinancing isn't worth the hassle unless rates fall back -- then go ahead and float.

Here's a link to our mortgage calculator.

By the way, if you want to keep tabs on what's happening to mortgage bond yields and mortgage rates, follow me @HoldenL on Twitter.

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