I walked into my office Tuesday and Anne ran up to me with the rate sheets from Wells Fargo and Chase. Do you want to lock in the Portman and Clark deals? The rates really came down this morning!  I looked and wow the rates were tipping below 5%. We called, emailed and spoke to the clients. Hemming and hawing about maybe the rates will go lower…. let’s wait, they both told me.  So, we said goodbye only to meet again soon. By 1:30PM the rates had worsen by almost ½ point. So, what was the reason to wait?

 

It is a mixed bag of hope, misinformation from too many media outlets, listening to friends and a little bit of greed. Remember, it is not a contest to see who has the lowest rate; it is about being happy with what you have a letting go. If I was offered a rate of 4.875% for a 30 year fixed loan with no points, I would jump on that and so should you. The rates fluctuate greatly, so if you need to close soon, lock soon please. The rates are very low. 

 

The rate game is scary game and not to be played by the faint of heart. Do not play the market because you will lose and do not get advice from some distant relative that claims to have gotten 4.5%.  Pick the rate that you will be comfortable with and take it when you can.

 

Here is another rate game that can result in hardship to the borrower. When your loan officer locks you in over the phone, get it in official writing (not email). Most lenders pay a loan officer based on rate; the higher the rate the more money they make. So, they will gamble if they think the rates are going down. They will tell you the rate is locked and “float it” in the hopes it will go down. If the rate goes down they will make more money, but if the rate goes down will they make less? Most loan officers will bite the bullet and honor the rate they quoted. However, there are some scrupulous people out there that will simply tell you any story to get out of it. Oh, we could not lock it in time-sorry your rate is ½ point higher. 

Remember, each 1/8 equals 8 cent per thousand dollars. So, with a 100,000 loan, waiting for that 1/8 drop will lower your payment by 8 dollars. In my neck of the woods, that cannot even buy a chilled Martini!

 

The rate game is a scary game, don’t play it. Pick your rate, be happy and get it in writing! I never want to hear let’s wait and see if they go down another 1/8.   

 Dale Robyn Siegel