If you followed my recent advice you would have only floated 1 day. Today there is something going on causing some of our banks to have a mid day price increase. So if you are floating, I say lock. If you are currently in the 6% range, call a lender and see if you can improve your position. Predicting rates is an impossible task, take the good when it is good.
I just looked at a rate sheet from one of our banks. Wholesale PAR rates are under 5.375 per cent. Par is where the lender makes no rebate and pays no fees. I have some suggestions if you think this may give you an opportunity to save on your monthly payments:
1- Contact one of the preferred lenders we link to off this blog.
2- Analyze how much you can save now.
3- make sure you understand the lenders full proposal to you, this means you will need a Good Faith Estimate.
4- Feel free to contact me for a second opinion, although I don’t do loans anymore I can help as a second opinion. I would guess I have personally closed over 700 loans and our companies have closed over 3000.
5- Don’t lock today, but play what I invented as the down down up lock game. In other words as long as rates go down each day, float. The moment rates go up, lock.
PS: In a market with the volatility we potentially have it is wise to refi with no costs or no additions to your mortgage balance. This gives you an improved position yet makes another refinance practical if rates keep dropping.
In the last 3 working days, interest rates have climbed over 1/4 of a percent. This is typical for the mortgage industry. Business moves to a slow volume and most mortgage companies and mortgage banks encourage their employees to take vacation time now. So why not raise rates? Usually their is a downward correction in early January. Each year has its own market factors that can cause exceptions. This years turmoil in the banking side is yet to show an upturn, so no one knows what that will bring.
My suggestion is to lock your loan in early January if you are in the process. Not being locked is risky in normal markets, even more so in this one. I will make commentary here on rates if they start to bounce around.
You may not have picked up on the fact that Kathleen and I own Homes And Loans, a mortgage company. Although I have personally written over 1000 loans in my career we refer our loans to either Rob Tamaela who is local, or to one of our branches. I believe you should only give your loan to a lender that is full time and on top of the market, and with all the real estate and writing we do, I just wouldn’t hire me now as a loan officer and you shouldn’t either.
However, we know loans, and that helps our clients a ton. We pared our mortgage company down from 100 loan officers, to only 5, these 5 are fabulous people and professionals.
Friday I posted that even though I believe it is risky to float your rate, I suggested things might be right to do so. I introduced this site to the down down up lock game, which is a concept I used to encourage people that wouldn’t lock at application to lock as soon as rates went up. So how was my advice? Understand, so called experts have taken entire mortgage banks down by leaving loans they were having to deliver to consumers unlocked. It is a risk.
Friday par was 6%: And today: 6% has a rebate of .305. In our hypothetical $400,000 loan the loan is $1220.00 cheaper for you.
So, should you lock? The game says you play another day, and we are playing the game. So we look again tomorrow. Don’t go golfing without your cell phone however, bad news can cause the market to have mid day price increases. Maybe you should lock. Oh, you want 5.875%. OK, rates didn’t go down enough to make that a par rate, you could dig up an additional amount of about $1000 and have that. I make a game out of it, but it is serious money when you are buying and have this issue to decide.
See you tomorrow. Larry Cragun
Did the interest rate you wanted go bye bye?
Those of you have followed me on RealEstateUndressed.com know that I am an advocate of locking your loan at the time of application. This especially applies on purchases. I have experienced too many instances of a surge in rates to believe in gambling by floating your rate. Todays circumstances may be different. May be is still a gambling type of approach. For those that wanted to float, about a year ago I introduced the “down down up lock game” to the blog world. This may be a good time to play it.
The rules of the down down up lock game are simple. Don’t lock today or any day until the rates go up. Lock the first day rates go up. I think today might be a day to play. So lets keep score. I pick the par rate from one of our leading banks. Par means there is no rebate and you pay all of the fees. Today par is 6%. For the sake of keeping score I am going to assume the mortgage amount is $400,000.00. In reality I am sure your mortgage is lower.
