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Ask The Experts: Lock in Mortgage Now or Wait Until Closing?

Q.We signed up to buy a condominium in 2007. It will be ready to close around July. The purchase price is $550,000. We are looking to borrow $350,000. With the ups and downs in the mortgages would it be advisable for us to lock in a mortgage now with a one-time premium of around $900 or should we wait till we are close to closing? -Satinder, TX

A. If you’re happy with the current rate, then lock it in.

People who are about to borrow money always say they want the best rate. It’s the same kind of game people play in the stock market: They want to buy at the very lowest point, and they want to sell at the very highest point. Anytime that happens, it’s sheer luck.

So ask yourself a different question: Am I happy with terms that are available? If the answer is yes, take them. You can always refinance again later if the rates get even better. Meanwhile, if the rates get worse, you’ll be glad you locked in. So you win both ways.

Too often, people try to make this stuff a lot more complicated than it really is. They set goals that are impossible to reach. They will only take a rate that is the very lowest rate; they will only sell their house for the very highest price; they will only sell a security that has made a profit. Achieving those goals requires dumb luck — and that’s not something I’d want to stake my future on.

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Ric Edelman is Chairman and CEO of Edelman Financial Services LLC, which manages billions of dollars for individuals and families nationwide. Ric is a frequent On the Money contributor and the author of seven books on personal finance, including his new #1 Bestseller, RESCUE YOUR MONEY.