AMONG ALL THE OTHER MYRIAD DECISIONS IN THE MORTGAGE PROCESS A BORROWER IS FACED WITH IS WHETHER OR NOT TO LOCK THE RATE AND TERMS, AS OPPOSED TO FLOATING. FLOATING SIMPLY MEANS THAT THE APPLICANT HAS DECIDED TO GAMBLE ON THE MARKET. HE'S RISKING THE CERTAINTY OF KNOWING EXACTLY WHAT HIS PAYMENT WILL BE IN THE HOPE THAT RATES WILL GO DOWN AND HE'LL DO BETTER THAN IF HE'D LOCKED AT TIME OF APPLICATION.
HOW AND WHY RATES FLUCTUATE IS DETERMINED MOSTLY BY THE BOND MARKET AND FED POLICY. THERE IS ALL KINDS OF INFO ON HOW THIS ALL WORKS, BUT ITS ALMOST LIKE THE WEATHER. THE METEOROLIGIST SAYS ON FRIDAY IT WILL BE A BEAUTIFUL WEEKEND, THEN ON MONDAY TELLS YOU WHY IT DIDN'T HAPPEN.
HERE'S WHAT APPLICANTS NEED TO KNOW:
I'VE JUST GOTTEN TWO NOTICES THAT INDICATE THAT BORROWERS SHOULD SERIOUSLY CONSIDER JUST LOCKING IN.
THE FIRST IS FROM ONE OF SUPERIOR'S CORRESPONDENTS, STATING THAT THEIR RE-LOCK/EXTENSION FEES ARE INCREASING. THIS IS IMPORTANT TO THE BORROWER WHOSE LOCK EXPIRES BEFORE HE IS ABLE TO CLOSE. APPLICANTS SHOULD BE AWARE THAT THESE FEES WILL NORMALLY BE APPLIED REGARDLESS OF THE REASON THE TRANSACTION DID NOT CLOSE ON TIME.
SO ITS IMPORTANT THAT WHEN YOU LOCK, THERE'S PLENTY OF TIME, AT LEAST A WEEK TO TEN DAYS, BETWEEN THE PROJECTED CLOSING DATE AND THE LOCK EXPIRATION DATE.
ANYWAY, IF THESE FEES ARE INCREASING, THAT SEEMS AN INDICATOR TO ME THAT THIS PARTICULAR INVESTOR IS HEDGING IN POSSIBLE ANTICIPATION OF A RATE INCREASE.
THE OTHER NOTICE IS FROM SUPERIOR'S SECONDARY DEPARTMENT. IT STATES IN A NUTSHELL THAT RATES HAVE IMPROVED FOR THE LAST MONTH, AND THAT A CORRECTION MAY BE DUE. IT CITES THE UNCERTAINTY OF THE MARKET, AND WORRIES AS TO THE FUTURE OF F'MAE AND F'MAC. IT ADVISES TO BE 'MORE CONSERVATIVE THAN USUAL.'
NOW, IF I KNEW FOR SURE WHAT RATES WERE GOING TO DO, I'D BE TYPING THIS FROM MY YACHT. I WILL SAY, THOUGH, THAT THE CHANCES OF THEM GOING UP SEEM A LOT LONGER THAN GOING DOWN.
HAPPY SAILING!
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