I know no one can predict the future, but I'm struggling with my current situation. We are building a house and not closing until Jan./Feb. 2010. I'm able to lock-in a decent rate now (5.00% with a .625 discount point), but it will cost $4,200 to lock-in now on top of all other closing cost and discount points. I love the idea of 5% rate, and could live with the $4,200 lock, but really prefer not to. Is there anyone out there that would recommend to lock-in now or would most everyone recommend to float? Thank you all for your great insight!

Greg, the extended lock cost + the discount is the equivalent of paying just about 2 points for the rate. With that being said, the big question is will 5% cost less than that once you are within 90 days of closing?

If you are a risk taker by nature then floating is the most logical. If you follow the rate trends over the last 5 years or so, the highest rates of any given year typically happen in the summer and the lowest in fall and winter. However, this year is far from a typical year so many mortgage pro's are less confident in cyclical trends that usual.

If you are risk adverse then it would probably be best just to bite the bullet and take the deal. Find out if you have a rate renegotiation policy or float down option with your current lender. That could help make the decision easier.