My agent called a few days ago and told me that my house is ready for settlement at any date now. The seller has found a new house so I can do the closing at the end of this month. However, the interest rate has been creeping up lately. I was quoted a 30-year fixed mortgage loan for 6.0% yesterday, compared to 5.75% two weeks ago. The difference in interest payments over 30 years is $7,000 between 5.75% and 6.0%
I can postpone my closing to the middle of October if I believe the rates will drop in the near future. It’s a dilemma for me now. Should I take the risk and wait until next week or should I lock in now? There’s an advantage of locking in now. My seller is going to rent my house for a month (He’s moving to his new house in November). The perk is immediate cash flow. However, if the rates are going to drop back to 5.75% zone then I might give up that month’s rent.
I’m hesitant to take the risk though. What if the interest rates continue to go up, to 6.25%? Then I will pay more interest plus losing a potential month’s of rent. I’m leaning towards earning one month’s of rent plus playing it safe on the interest rate.