Monday, January 5, 2009

Mortgage Rates: Gamble As You Shop.

Mortgage Rate Volatility slowed a bit in December after record-breaking changes in October and November. The slowing pace of change is good news for homeowners that joined the Refi Boom that closed out 2008. It was much easier to shop for a mortgage rate in the absence of 4- and 5-Rate Sheet days.

A "rate sheet" is a mortgage lender's active, available-to-the-public mortgage rates for all of its products. This includes 30-year fixed rate mortgages, 5-year ARMs, and the like.

However, rate shopping is not like shopping for a flatscreen TV to watch the BIG game. Mortgage markets are still moving with tremendous velocity, historically. Over the last two months, mortgage rates changed 2.15 times per day, on average -- nearly 11 rate changes per week.

In December, mortgage rate quotes "expired" every 3 hours, 39 minutes.

This rapid pace of change is one reason why "sleeping on it" can be dangerous. Mortgage rates may be low in the morning, but by the afternoon, they could absolutely be not-so-low.

Look, I've heard it from enough homeowner's by now that I can safely tell you -- unless you're prepared to accept a higher rate, you may not want to gamble on getting the lower one. A good question to ask yourself is this: "Is it worth a 1/8 percent rate increase to gamble that I'll find an 1/8 percent lower rate tomorrow?"

Mortgage shopping wasn't always complicated, but it is now.

In addition to a volatile rate environment, external factors are muddying up the mortgage waters, too:

  1. Guidelines continue to tighten high income households.
  2. Falling home values are making refinances very difficult. Your area is not immune. Trust us.
  3. Rising defaults are pushing private mortgage insurance premiums higher.

In fact, there are very good reasons to consider taking the first low-rate mortgage you find that fits your long- and short-term financial goals. The most important one, of course, is that it's as likely that mortgage rates will rise in 2009 as they will fall. Forget what the experts tell you -- they're paid to make guesses and they're often wrong.

In markets like this, a sound piece of mortgage advice is to make friends with a "good lender". They're good mortgage lenders for a reason. They're fair with clients and they provide extra support that you won't get from a call center. And, most times, they're cheaper, too.

So, shop for mortgage rates every 3 hours, 39 minutes, or save yourself the trouble and work with a reputable jumbo mortgage lender who's both fair and knowledgeable. If you ever want a speedy rate quote, call or email me. We lend in all 50 states.