Interest Rates - Mortgage Interest Rates - CAUTION !!!! ...... Anyone putting mortgage rate reports up, usually obtain their information from the 3 major leading services that pass this information out for a price. Most of your loan officers can't predict rates, let alone, many of these companies are just taking a stab at it.
If you see blogs or articles titled below, they are usually copied from a service :
Mortgage Rate Update
Daily Mortgage Rate Advisory
Interest Rate Lock Recommendation
Mortgage Rates Report
In my honest opinion of 16 years in the mortgage industry, 99% of these reports produced from loan officers are again, from paid services. Now, these mortgage rate services are not guaranteeing what they state, but several of them are very good. And they will give you advice on what to do or advise in a 60 day period, as I listed below.
In these reports, most times, you will see the loan officer write these 4 lines in their mortgage rate reports.....
- Lock if my closing was taking place within 7 days
- Lock if my closing was taking place within 8 and 20 days
- Float if my closing was taking place between 21 and 60 days
- Float if my closing was taking place over 60 days from now
PLEASE READ THIS!!!! (it might be boring & long)- Why am I writing this? For two reasons
1. Education - I believe that the consumer needs to be aware that it's not your savvy loan officer that knows each and every market report out there, to establish this so-called expertise that is written on paper. There is just not enough time in the day to follow the market that closely, while still trying to be a loan officer. Hence why there are services that provide this information. Hence why there are financial analysts that do this as a full time job. Do you see these same analysts on MSNBC or Bloomberg doing mortgages? no.... More on this later below.
2. My other reason for bringing this up is that it's just advice, that could backfire. Yes, the market is volitile, especially more than ever. A great example of this is the advice to float if your closing is taking place 21 to 60 days from when these mortgage interest rate reports are written. 8 out of 10 times, you will see the author tell you to float rates for this time period. Because usually, the market will rebound some, and pricing will get better. Did you notice that I said usually twice. The word usually is just that, not guaranteed, a better than 50% chance. Rut row...
I locked a client in for 60 days on 9/5/08 at 6% with 1 pt and no mortgage fees on a $253,000 mortgage. They are closing on 10/21/08. Right now, that same rate is exactly 2 pts higher. Which means it would cost the buyer $5,060 more out of pocket. Or, to keep the costs the same and not charge the 2 pts, that rate would be another 3/8 percent to a 1/2 percent higher. Which means that their payment would be $65 to $87 more month. Ouch again.....
I am not knocking the loan officers that write these... but as stated, it's usually copied material or just material reworded. Some might add their own two cents, but why even take that chance? You want a loan officer that not only looks at these reports that are supplied by specialty companies, but someone that understands how the market works, how rates shift, and to know when they see a spread difference in a specific rate. Meaning, I can sometimes get the same deal on a 6.00% rate as I could on a 6.25% rate. Each increment of an 1/8 percent carries a different value. These are called pools on money. And sometimes that value could be carried over to a lower rate. That is exactly what I did for these clients that I locked into at 6%. I found value in a better rate. I look at the different spreads each and every day.Many don't do this daily.
Just a FYI... I might piss off some of those that write those market reports. But a little secret.... these are usually used for searche engines, being searched on the internet. They want tehir phones to ring or for you to e-mail them. Just my opinion of 16 years in the mortgage industry.
I am here to educate and to give you vital information, and not with blogs that just get good google juice. And those market reports that sound like they really know what they are doing? You don't trust me on this? Take a look at each report and put them side-by-side. You won't see much of a difference in how they are written. And the style will usually be the same, especially the rate lock or float advice. Because that is how the services send their reports out.
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Experience & Knowledge at its BEST !!!
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For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
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