Now we move forward with another step in the residential mortgage process, the rate
lock. Obviously, rates are headed up, over Christmas weekend some overseas markets
(China…) took some action that has negatively prompted our markets to respond unfavorably,
they raised their interest rates .25%, therefore causing rates to move toward the
predicted 5.50% range sooner than anticipated. The Homepath product, although it
offers 10% down, 2nd home financing, has one downfall and that is the rate runs anywhere
from .375% to .50% higher on a 30 day lock period, due to risk factor and NO monthly
PMI insurance, which if you had to have PMI it would run approximately $180 per month
in addition to your monthly payment! On the positive end, PMI not tax deductible,
mortgage interest is. Below is the Homepath pricing for today, locking your rate
for a 30 day period. We will be able to lock this rate tomorrow upon your decision,
and confirming no further changes in rates.
Loan amount = $224,910.
5.0% = $1207. P and I 5.25% = $1242. P and I 5.625% = $1295% P and I
Taxes = $ 260
Insur = $75
$1542 total $1577. Total $1630. Total
1 origination + 1.75 90% loan + .50 30day lock 1 orig + .50 30 day lock fee 1 orig
+ no other fees to lock for 30 days
This would increase your closing costs by this option, increases closing costs by
Please review the above. Again there is no PMI of $180 per month, therefore in the
long run any one of the above options is a good decision.