Funny thing about timing. Sometimes we’re on, sometimes we’re off. When it comes to real estate, regardless of the choices and consequences, some of us made money and some of us lost money. As if watching the rising temperatures, price of gas, food and basic commodities wasn’t enough to be concerned with, many of you are stressing out trying to figure out “if it really is the time” to get out there and buy a house. Before answering that, let’s see what David Reed, author of Mortgage 101 and Mortgage Confidential, has to say about “The Best Time to Lock in Your Rate,”
“What do you think about rates … should I lock in now or wait to see if they fall further?” Think I’ve been asked that a time or two over the past 18 years? You better believe it. It’s a good question—one that goes through every single buyer’s head at some stage. A quoted interest rate is no good unless you’ve confirmed, in writing, that your loan is indeed “locked,” or guaranteed for a designated period of time. You need to be proactive with your locked rate as well and don’t assume that your loan officer already locked you in.
In fact, your loan officer shouldn’t lock in your rate without your specific instructions. If it was locked in and rates went down you’d be pretty mad, wouldn’t you? While neither real estate agents nor loan officers are in the business of predicting the future, it’s still possible to make a prudent choice in the face of uncertainty. Would you rather lock in your rate and watch rates fall or not lock in your rate and see rates go up? If you decided to lock and rates go down, you’ve secured the market rate that you were happy with. But if rates went up and you didn’t lock, you’d be paying for that mistake for the rest of the loan. There is an even worse possible scenario: After not locking in your rate, rates shoot up and you no longer qualify for the loan.
So it’s important to ask yourself: “Which way would I rather be wrong?” If you are comfortable with the rate you’ve been quoted, talk to your real estate agent about the possible consequences of waiting to lock it in.”
So I know this: As I mention in part 1 of this series, the housing market is moving - buyers are still buying, and sellers are still selling. As of the writing of this article, and according to the MLS, at this time on June 9th 2008, at 11:30 P.M. in Loudoun County, there are still over 3,000 homes, townhomes, condos, etc. for sale on the market (and that’s not incl. new homes not listed, FSBO’s, etc.). There are over 1,000 homes that are Under Contract or Under Contract with contingencies with and without Kick-out clauses. 500 properties have sold in the last 30 days that the MRIS knows of. Of those, only 72 were Foreclosures, REO’s or Short Sales. According to my trusty HP 10bII calculator, those “deals and steals” accounted for less than 15% of all homes sold in Loudoun County – again, just in the last 30 days. Evidently, this is the time to buy for quite a few folks ‘out here in these parts’.
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