How low can we go? 30 yr fixed at 3.75% with no fees...

NEW -> Contingent Buyer Assistance Program
i was offered 4% for jumbo 950k, with 6 month rate lock.  0.125% increase from current rate of 3.75 for the rate lock bc my house will take 6 month to be built, i have asked for rate lock given uncertainty and likely rise of the interest rates.  I have a one time free float down 60 days from closing.  i was charged approx 1% refundable fee for the lock down.  The good news is that no matter what happens in 6 month, the max rate will be 4% and if the rate is lower 60 days from closing I have the option to choose that rate instead.
 
A fee paid for the purpose of locking the rate, is effectively insurance, not interest.

And since this is Talk Irvine, remember too that only the first $1M of mortgage indebtedness is eligible to be included in your Itemized Deductions.
 
The California Court Company said:
just use the amount in line 803 from the final HUD-1 for deduction.
Click to expand...

Effective for applications after October 3, 2015, the HUD-1 will no longer exist for nearly all mortgages. The TILA-RESPA Integrated Disclosure rules will become effective replacing the initial GFE/TIL and final GFE/HUD-1 with a Loan Estimate and Closing Disclosure.
http://www.consumerfinance.gov/regulatory-implementation/tila-respa/
 
The California Court Company said:
just use the amount in line 803 from the final HUD-1 for deduction.
Click to expand...

Failed to mention, that line 803 of the HUD-1 doesn't always represent the discount points you paid for the purpose of reducing your rate.
 
Perspective said:
The California Court Company said:
just use the amount in line 803 from the final HUD-1 for deduction.
Click to expand...

Failed to mention, that line 803 of the HUD-1 doesn't always represent the discount points you paid for the purpose of reducing your rate.
Click to expand...

are you in the business Perspective?  Seem to have a lot of interest in this.  Can I refi with you? :)
 
ps9 said:
Perspective said:
The California Court Company said:
just use the amount in line 803 from the final HUD-1 for deduction.
Click to expand...

Failed to mention, that line 803 of the HUD-1 doesn't always represent the discount points you paid for the purpose of reducing your rate.
Click to expand...

are you in the business Perspective?  Seem to have a lot of interest in this.  Can I refi with you? :)
Click to expand...

I concentrated in tax law in law school and continue to study it today for personal interest and application.
 
ps9 said:
Perspective said:
The California Court Company said:
just use the amount in line 803 from the final HUD-1 for deduction.
Click to expand...

Failed to mention, that line 803 of the HUD-1 doesn't always represent the discount points you paid for the purpose of reducing your rate.
Click to expand...

are you in the business Perspective?  Seem to have a lot of interest in this.  Can I refi with you? :)
Click to expand...

Ps9 - I thought your the refi go to guy for the lowest rate (that made lot of referrals)
 
Angels_Baseball_2015 said:
What if you exercise the option to float down to the lower rate?

Otherwise, just not do the rate lock, and buy points instead, assuming the rates don't rise too dramatically.
Click to expand...

Well, the purpose of the fee was still to lock the rate (insurance), and a feature of that fee is a float-down option. However, I can see a reasonable argument if you do exercise the float-down that the fee "discounted the rate." You can always deduct it. The question is whether it can withstand an audit.

I locked on August 24th because the 10Y UST was trading below 2% allowing the lowest rate pricing since April 2015. The price for the locked rate is an eighth, non-deductible. If I didn't pay an eighth for the 150-day lock, I could lock 90 days out from COE at no cost.

If the rate available then were just an eighth more than my locked rate, I would have to pay a quarter to lower it an eighth (to receive the same 3.75% rate). That quarter is deductible, but the net effect would still be a higher price.

If the rate available 90 days out were just a quarter more than my locked rate, I would have to pay seven-eighths to lower it a quarter (to receive the same 3.75% rate). That seven-eighths is deductible, but the net effect would still be a much higher price.

That's the insurance effect of the lock. The odd thing is, I'm not rooting for rates to rise to justify my insurance expense, because I have a float-down option from 9-24 through 10-24. I'm rooting for the Fed to not raise the Funds Rate AND provide dovish commentary hopefully pushing the 10Y below 2% again in late September. The difference is, I'm rooting for this, and not extremely nervous about the Fed meeting next week.
 
Perspective said:
Angels_Baseball_2015 said:
What if you exercise the option to float down to the lower rate?

Otherwise, just not do the rate lock, and buy points instead, assuming the rates don't rise too dramatically.
Click to expand...

Well, the purpose of the fee was still to lock the rate (insurance), and a feature of that fee is a float-down option. However, I can see a reasonable argument if you do exercise the float-down that the fee "discounted the rate." You can always deduct it. The question is whether it can withstand an audit.

I locked on August 24th because the 10Y UST was trading below 2% allowing the lowest rate pricing since April 2015. The price for the locked rate is an eighth, non-deductible. If I didn't pay an eighth for the 150-day lock, I could lock 90 days out from COE at no cost.

If the rate available then were just an eighth more than my locked rate, I would have to pay a quarter to lower it an eighth (to receive the same 3.75% rate). That quarter is deductible, but the net effect would still be a higher price.

If the rate available 90 days out were just a quarter more than my locked rate, I would have to pay seven-eighths to lower it a quarter (to receive the same 3.75% rate). That seven-eighths is deductible, but the net effect would still be a much higher price.

That's the insurance effect of the lock. The odd thing is, I'm not rooting for rates to rise to justify my insurance expense, because I have a float-down option from 9-24 through 10-24. I'm rooting for the Fed to not raise the Funds Rate AND provide dovish commentary hopefully pushing the 10Y below 2% again in late September. The difference is, I'm rooting for this, and not extremely nervous about the Fed meeting next week.
Click to expand...

Just stick to law.
 
Perspective said:
That's the insurance effect of the lock. The odd thing is, I'm not rooting for rates to rise to justify my insurance expense, because I have a float-down option from 9-24 through 10-24. I'm rooting for the Fed to not raise the Funds Rate AND provide dovish commentary hopefully pushing the 10Y below 2% again in late September. The difference is, I'm rooting for this, and not extremely nervous about the Fed meeting next week.
Click to expand...

Historically what has the relationship been between changes in the fed rate and the 30yr mortgage rate?
 
Perspective said:
Angels_Baseball_2015 said:
What if you exercise the option to float down to the lower rate?

Otherwise, just not do the rate lock, and buy points instead, assuming the rates don't rise too dramatically.
Click to expand...

Well, the purpose of the fee was still to lock the rate (insurance), and a feature of that fee is a float-down option. However, I can see a reasonable argument if you do exercise the float-down that the fee "discounted the rate." You can always deduct it. The question is whether it can withstand an audit.

I locked on August 24th because the 10Y UST was trading below 2% allowing the lowest rate pricing since April 2015. The price for the locked rate is an eighth, non-deductible. If I didn't pay an eighth for the 150-day lock, I could lock 90 days out from COE at no cost.

If the rate available then were just an eighth more than my locked rate, I would have to pay a quarter to lower it an eighth (to receive the same 3.75% rate). That quarter is deductible, but the net effect would still be a higher price.

If the rate available 90 days out were just a quarter more than my locked rate, I would have to pay seven-eighths to lower it a quarter (to receive the same 3.75% rate). That seven-eighths is deductible, but the net effect would still be a much higher price.

That's the insurance effect of the lock. The odd thing is, I'm not rooting for rates to rise to justify my insurance expense, because I have a float-down option from 9-24 through 10-24. I'm rooting for the Fed to not raise the Funds Rate AND provide dovish commentary hopefully pushing the 10Y below 2% again in late September. The difference is, I'm rooting for this, and not extremely nervous about the Fed meeting next week.
Click to expand...

I had very similar thoughts to you, and I locked into a very similar program with Wells on August 25 @ 3.875 with the option to float down prior to COE.  It definitely takes out some of the uncertainty around the Fed open market meeting next week.  I'm also hoping for them to not raise rates in September/October but we shall see....
 
eyephone said:
Perspective said:
Angels_Baseball_2015 said:
What if you exercise the option to float down to the lower rate?

Otherwise, just not do the rate lock, and buy points instead, assuming the rates don't rise too dramatically.
Click to expand...

Well, the purpose of the fee was still to lock the rate (insurance), and a feature of that fee is a float-down option. However, I can see a reasonable argument if you do exercise the float-down that the fee "discounted the rate." You can always deduct it. The question is whether it can withstand an audit.

I locked on August 24th because the 10Y UST was trading below 2% allowing the lowest rate pricing since April 2015. The price for the locked rate is an eighth, non-deductible. If I didn't pay an eighth for the 150-day lock, I could lock 90 days out from COE at no cost.

If the rate available then were just an eighth more than my locked rate, I would have to pay a quarter to lower it an eighth (to receive the same 3.75% rate). That quarter is deductible, but the net effect would still be a higher price.

If the rate available 90 days out were just a quarter more than my locked rate, I would have to pay seven-eighths to lower it a quarter (to receive the same 3.75% rate). That seven-eighths is deductible, but the net effect would still be a much higher price.

That's the insurance effect of the lock. The odd thing is, I'm not rooting for rates to rise to justify my insurance expense, because I have a float-down option from 9-24 through 10-24. I'm rooting for the Fed to not raise the Funds Rate AND provide dovish commentary hopefully pushing the 10Y below 2% again in late September. The difference is, I'm rooting for this, and not extremely nervous about the Fed meeting next week.
Click to expand...

Just stick to law.
Click to expand...

Not sure what this means - care to elaborate?
 
irv81 said:
can you explain this: how does pushing the 10Y below 2% again in late September benefit your mortgage rates?
Click to expand...

Mortgage rates are tightly related to the 10Y UST. When the 10Y UST drops an eighth over a few days, the 30-year fixed mortgage rate typically drops the same amount.
 
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