Locking-in An Interest Rate – A Real Pain!

I think we’re within 60 days of actually closing on our house.  No, I don’t have any concrete proof that we’ll close within 60 days but according to our salesman, the construction manager has some incentives to be done within 100 days of May 15.  I think he put it that way just to confuse me.

percentageI had to find a calendar and then count 100 days from May 15 which brought me to about mid-August.  Now why didn’t he just say that in the first place?  See why building a house is so stressful!  Even if it doesn’t happen until the first week of September, we’re still close to 60 days away.

So what’s my point. Well, I’m getting there.  I was thinking, honestly, I was, about getting our interest rate set and then Erica, our brilliant Real Estate friend emails me that I should be locking in my interest rate right now.  She said that interest rates were starting to move up and I might want to get mine locked in now if that was possible.  Since I hadn’t heard a thing from our finance guys, I decided to find out from them when I could “lock-in”.

Erica had already found out that the financial guy managing our account had once again, changed.  Someone by the name of Ben (this is an alias to protect the ignorant) was not in charge of our account.  I hadn’t talked with or seen this guy since starting this whole mortgage financing activity way back in March.  I think they had pulled my credit report and decided that was all he needed to know about me and my wife.  I guess that’s good but I sure would like to know they are getting things done.

Anyway, I finally made contact with him and asked about locking in my interest rate.  He had no idea when we would be closing on our house so I enlightened him.  He seemed to accept what I said so he did a bunch of spreadsheets showing me various VA interest rates and costs associated with each. Apparently, you can lower your interest rate by paying additional “discount points” which are about 1% of your purchase price.  Well, this is already getting complicated.  The worse thing he was telling me was that interest rates were going up.

calculatorSo I looked at all the information he sent me, these were estimates of all our closing costs, any incentives provided by Wilshire Homes and the finance company, any monies already paid towards the home, and any monies we had committed to pay (downpayment).  It was a lot of numbers.  I haven’t crunched this many numbers since I last worked and that’s been 5 years ago!  But crunch numbers I did.  I also asked Erica to crunch the same numbers which she did probably a lot faster and better than I did.

Finally, after a few hours I decided to ask Ben to do one more spreadsheet with us paying two discount points and a lower interest rate.  I wanted to get our monthly payment down to something as reasonable as possible and not have to rob a bank trying to take enough money to the closing table whenever that time comes.

So, around 4 pm, Ben gave me our newest spreadsheet analysis and it looked pretty good.  I directed him, sounds official, to “lock in” that interest rate and Erica agreed that was best for us.  The time is important to note because the finance office closes at 5 pm and you have to lock-in by then or the rate could go up by the next morning.  But we met the 5 pm deadline by at least a few minutes!

So now we know what it’s going to cost us to get into this new house and how much we’re going to have to pay each month.  No, I’m not going to tell you either of those numbers because you really don’t want to know!

08db189e28d5df54b57752531e955027The day after I got our interest rate locked in, Erica sent me an email telling me that the Texas Vet Land Board home loan interest rate just jumped UP almost half a point!  That’s about the biggest jump in a long while.  But, we’re already locked in so it has no effect on us!  Hurray for doing what you should do when it’s time!  Now wasn’t all that really exciting?

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