Refi: Lock or Float?

[noppenbd]

Ok, we are in the process of refi'ing our 1st and 2nd mortgages into a single 1st. 1st is through National City. We have a 2nd and a HELOC through our local credit union. We are currently refi'ing the 1st and 2nd into a single 1st through our credit union. We have been told by other lenders that it will be difficult to refi through anybody else because the credit union would have to agree to be subordinated.

We currently gross about $10K a month ($6.5K from my salary and 3.5K from my wife's). The current 1st and 2nd payments are $1070 (PITI) and $570. I am concerned that if I were to lose my job it would be a pinch to make the $570 payment. On the new loan, the rate is currently 5.0%, no points, term of 30 years, and the PITI would be $1090. We can lock the rate now for 45 days, or we can let it float. If we lock, we can float down one time, but there is a 0.5% charge (about $800). If we float, we can lock at any time, up to 3 days before closing (probably mid April).

BTW, the appraisal came in fine, so we are good to go pending final underwriting.

What do you think, should we float or lock? We are in Maryland, and bankrate says the average 30-yr is at 5.05%. I am leaning towards locking at 5.0% because the rates lock like they might go up at least in the short term.

[sweeps]

My opinion only... I would not get greedy; I would lock.

[noppenbd]

Sweeps, that was my thought as well, except Clark Howard was saying a couple of days ago that his prediction was for rates in the mid 4s. I admit I started to salivate a bit at that thought.

[MonkeyMama]

I have never refied or borrowed without a lock - ever. You need to know what you are getting into. Otherwise, it just becomes a gamble. (No need for greed, indeed).

The one-time float is an awesome deal if rates do drop. win-win.

[noppenbd]

Ok, I took sweeps' and MM's advice and locked down the 5.0%. Now the only question, how can I negotiate down some of these closing costs? The way I see it, this refi is in the credit union's interest, since they will move from 2nd/3rd lienholder to 1st/2nd (and only) lienholder. Any ideas for using that as leverage? I am currently working with a mortgage officer there and I'm not sure how much power she has to negotiate.

[blankcheck]

Well there's no harm in asking

[sjenkins]

I say float... not over yet

[ukey]

always ask for whatever they can give you man. Think you are a safe customer so likely they will help to pay some of the closing costs at least.