Here is the scenario. We are planing on building a home starting on April 24th. Luck and weather permitting it will be finished in six months. My wife and I both have credit scores above 750.

We currently have our permanent financing approved at Bank Of America and the construction loan at a local bank (awaiting approval), the local bank was found by Bank of America. The permanent financing rate is typically locked 60 days before the construction is finished.

We have been monitoring rates, news, etc, and got a bit scared today so we did a little research whether we could lock the permanent financing rate earlier. What we found out is that Bank of America wants 0.50% of the total borrowed amount per month that we lock up to 60 days before closing. We went ahead and called another bank (Bank of the West) and they said they could lock it for 180 days for 1.3% of the total borrowed amount, much cheaper than Bank of America. They also said 1% for 150 days.

After doing the numbers, even at Bank of Americas price for locking, getting a loan with the current rates would pay off fairly quickly if the rates jump to lets say 6% or something like that.

So I guess the question is, will it be worth spending the extra cash to lock it right now? is there some other bank I should be looking at for that permanent financing which would be a bit nicer? are there any banks that offer long term locks with float down rates?

Thank you for any advice you can give us.

--Carlos

Instead of using a long term rate lock right now, I would follow mortgage rates here and wait until it looks like rates would have a long term trend up.  If rates stay low, you could use the money you save to buy the rate down or simply keep it in your pocket.

There are lenders that will allow a float down option, but it usually is in the last 30 days of the lock.

So my guess is that we have to be ready with whichever bank we want to lock with for the day that we decide its time to get that long term lock based on news and trends, etc.

Does anyone here know which banks have the best deals for long term locking? I would really like one that credits locking fees into your mortgage or closing costs once you finally close.

Thanks,

--Carlos

Check with a broker in your state at our directory here.  You will find a professional that can help you.  If there is not a listing for your state, let us know as several of the professionals here can originate in multiple states.