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Should I float? Should I lock?

This question has been asked of many a Realtor. Heck, my wife and I asked our Realtor on the very first house we bought so many years ago. Since then I have learned and have been teaching the correct answer to many a home buyer or refinancer.

It depends! Rates are always fluctuating. Today it goes up an 1/8, tomorrow down an 1/8. Then there are the really big jumps. Some really terrible economic news is released (ripped from today's headlines) - "The Labor Department repoerted a loss of 4,000 jobs in August." Rates have improved by up to a 1/4 point. (Why they improved is room for another blog post.)

Your mortgage professional partner should be able to guide you and your clients as to the best course of action. It isn't a gamble. Though no one does possess a crystal ball, there are many methods in determinng how rates are going to be acting in a particular day and over the short term. As a Realtor you should also be aware of the market situation so you are not taken by suprise.

Good Economic news = Worsening Interest Rates. Good Economic News = Improving Interest Rates. Stock Market Jumps = Worsening Interest Rates. Stock Market falls or corrects = Improving Interest Rates.

These are always good rules of thumb to live by. The best thing is to be getting regular updates from your mortgage professional so you appear to be the professional as well!

Posted by Matthew Rosov, Certified Mortgage Planning Specialist on 09/07/2007 11:33 AM

Comments (8)

mortgage rates, education, tips

8 Comments on Should I float? Should I lock?

Good post. Thanks,

09/07/2007 11:36 AM

by Jeff Kessler ABR,GRI, Texas 512.801.5666 (Austin Homes Realtors)

the market has built in a rate cut by the fed in september. todays employment numbers were lousy. If

the "fed speak" that comes out after sept shows they are willing to cut further then you will get a nice drop in rates..mike

09/07/2007 03:14 PM

by MICHAEL CAREW (NJ LENDERS CORP.)

I love that question myself. People ask me "what do you think rates will be doing next week" I say "hold on, let me get my crystal ball out and after that I'm retiring because I'm going to use it to hit the powerball" they get a kick out of it. I just let them know if there are any major reports coming out that I know of and if there are then it can go either way depending on the news... Realtors should definitely stay updated though so they are on the in. My fiancee does a fantastic job of keeping up dated as an agent. Yes I help her out but she does a lot on her own with guidelines and such. Even as simple as knowing the conforming loan limits.

09/08/2007 10:38 AM

by Rick Grand (Oregon Real Estate Properties)

Its all about weighing risk vs reward. No one can predict this - I had a client lock in Monday because rates were slightly worse than when we ratified - then they went down Friday. You never know.

09/08/2007 04:22 PM

by James Downing - REALTOR® - Washington DC Real Estate (Coldwell Banker Residential Brokerage)

Thanks for all the comments. It's true - You never do know. Even the "experts" who make the big bucks advising others are wrong on occasion.

09/08/2007 07:15 PM

by Matthew Rosov, Certified Mortgage Planning Specialist (Envision Lending Group)

I'm just a homeowner trying to decide when to lock in my re-fi rate. I don't know why I'm having trouble grasping your terminology. When you say "worsening interest rates" you mean climbing interest rates? Right? And "improving interest rates" refers to decreasing interest rates?

Worse=Higher?

02/21/2008 02:38 PM

by Michelle

Michelle - You are correct. Worsening rates means they are going up, where as improving rates indicates going down.

02/21/2008 03:00 PM

by Matthew Rosov, Certified Mortgage Planning Specialist (Envision Lending Group)

Take the advise of your mortgage specialist.

Patricia Aulson/ Lic NH ME MA Hampton NH Real Estate Portsmouth NH Real Estate

03/14/2008 08:05 AM

by Patricia Aulson (PRUDENTIAL RUSH REALTY)