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The Rate/Waiting Game

By
Services for Real Estate Pros with Auto & Home & Life Insurance throughout North Carolina

Consumers, aren't we all?  If you own a home or are thinking about buying one, you just may be familiar with one of the battles going on right now.  That battle involves interest rates.  "Spoiled are we, yes we are," I say in my best Yoda voice

  In a world where some houses have stagnated or plain tanked in value, the same world where credit extended to folks in a position of uniqueness may have been stopped, we live in an economic atmosphere where some consider lower interest rates a part of the cure.  (Between me and you and please don't tell a soul... these lower rates have probably been going on WAY too long as an economic stimulus.  Frankly, should of ended long ago, but...)

  Take advantage of them while you can!  Many folks are sitting on the proverbial fence, wanting to know if rates may jump down a 1/4% or 1/8% or even a full freaking point!  Today, interest rates still hover in the high 4% range for prime borrowers on a 30-year fixed rate mortgage. 

  Hesitation may cost or that roll of the dice may save you a buck or two.   There are folks everywhere predicting where interest rates may end up.  I believe in the cycle, the circle.  Heck, I think we need to learn from nostalgia.  More than that, my best advice is the following:

Turn in your mortgage application and supporting documentation right now!  If you aren't ready to jump, at least you can practice that vertical leap when you are ready to lock in.  This way you will have already set the wheels in motion whether you are waiting to buy or refinance or getting on the bandwagon right away.  Here's a brief (albeit not totally extensive) list of what you'll need to get together:

* Last 2 years W-2's and 2 most recent pay-stubs

* If you are a renter, have your Landlord's name, address, and phone number handy. Make sure you have that info for the last 2 years of your rental history.  Assuming you pay your rent by check (and I hope you do) get 12-24 months of cancelled checks.

* Last 2 Months Bank Statements (All Pages) & the most recent statements on all asset accounts (401K, IRA, Mutual Funds, Retirement, Etc.)

* If you are Self-employed, you'll need the last two years tax returns with all schedules and attachments... along with a year-to-date Profit & Loss for your business.

* For purposes of identification, you'll need copies of your social security card and photo I.D. (typically your Driver's License)

* If you are refinancing, you'll need a few of the things above... but will also need your most recent Mortgage Statement & Homeowner's Insurance Dec page (which is the top page of your Homeowner's Insurance). It's also a good idea to get copies of your most recent statements on all other accounts you want to pay off... assuming you want to consolidate high interest debt.

* If you own more than one property, you'll need the most recent Mortgage Statement, Homeowner's Insurance Deck Page, & copy of any leases you have on rentals.

* Any credit issues (late payments, bankruptcies, judgments, etc) must be addressed in a very detailed credit explanation letter and appropriate supporting documentation, if applicable.

* If you aren't currently escrowing your taxes, you will need copies of paid/unpaid tax bills.

* Retirement/Social Security award letters if you are receiving that type of income.

Getting these things together and submitting to the lender will help ensure there are no delays when you want to lock-in to that killer interest rate.

  Think about it... hard and wise.  Speculation got us in trouble.  Don't let it do the same to you.  While you may turn out right in interest rates dropping a slight percentage here and there, it may not be wise to opt for a $300.00 savings if you can get approved for something that will save you $200.00 right now.  What if that $200.00 savings goes away all together?  Roll the dice all you want, my friends... if you can attain (at a relatively decent cost) fixed rates on a mortgage of any kind in the 4% bracket, history will probably be very kind to you.  Expect at least 7% before the Mayan Calender comes into play:)

 

Rate/Term Refinance

Your Credit Report

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How to help make sure your loan closes as fast as possible.

 

 

 

Comments (29)

Jennifer Monroe
Indigo Home Team powered by Compass - Charlotte, NC
Real Estate REALTOR®/Broker/Designer

Why would anyone wait for an eighth percent drop if the house they really want is available NOW? Is it the miniscule price difference or the end product people are most focused upon? I don't care how many mark-downs those shoes get if I don't love them. The same SHOULD be true with so-called consumers. Take the plunge for what you love when it comes along. You may never find something that wonderful again! That philosophy fits more than just real estate ;-) I'm tring to follow my own advice here...

Great post as always My Jason!

Jan 15, 2009 09:41 AM
The Somers Team
The Somers Team at KW Philadelphia - Philadelphia, PA
Delivering Real Estate Happiness

Jason - Well said as usual !  There certainly seems to be this "frenzy" that is out there... I know more so with the REFI market, but a little bit with purchases.  The big picture is the folks benefiting frm these low rates are in an awesome position !

Jan 15, 2009 10:34 AM
Audrey June-Forshey
RE/MAX Realty Services - Darnestown, MD
GRI, Gaithersburg, MD

I had someone call me yesterday about refinancing.  Should I wait, or should I do it now?  I said do it this minute.  How much lower can they go?  I guess they could go lower, but WTH??  He wanted to argue with me that they would probably go lower because of the current state of the economy and wanted to wait??  I have never seen the rates this low, don't know if I will again.  I say just do it.

When I started in the dark ages we had rates of 11% to 12% and we sold houses left and right. 

Jan 15, 2009 11:17 AM
Joe Adams
Major Mortgage USA/Branch Manager - Montrose, CO

Oh Mi Amigo, I have been gone for a few months and you have "mellowed" 

 

Whats UP

Jan 15, 2009 12:19 PM
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

I think it's too volatile right now and you never know if it's up or down.

Jan 15, 2009 12:49 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Jason.. it's been volatile for months.... and you put it into easy to understand words... funny that many of us are thinking about the same things, considering that I just wrote about this myself... but in a different tongue.  Good job...  it's like a boyscout, be prepared. But in my statement, do it now...

jeff belonger

Jan 15, 2009 01:25 PM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Jason, these current rates are great. The sooner people realize that and go through the documentation steps you've outlined, the better.

Jan 15, 2009 02:05 PM
Jeff R. Geoghan
Coldwell Banker Realty - Lancaster, PA
REALTOR, Marketing Manager

We're sitting on 5.25 on a 30 fixed.  I'm waiting for it to get to 4.25 with 1/2 point!

Jan 15, 2009 03:21 PM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Jason - well stated, now the question is: Is it right for that person and knowing you, truth comes first. Honest he is, young sardiwalker.

Jan 15, 2009 03:55 PM
Anonymous
Dave

As a homeowner this blog and others have helped me immensely. I turned in my paperwork yesterday and locked in yesterday's rates this morning at 4.5% for 20 years, no points.

As with buying a car, I researched the subject intensely for a couple of days to the point of knowing enough to be dangerous. Consumers that only look at the graphs on bankrate might wait too long. But after looking deeper, rates look much more tenuous.

I've heard that 85% of the loans are refi's, and the good rates are only for those with excellent credit and plenty of equity. Having only had a few economics courses 20 years ago, it seems illogical overall for the economy and the banking industry since most of these people were probably paying their previous mortgages of 7% (give or take) reliably.

Now I'm off to other subjects ... maybe life insurance is next.

Jan 15, 2009 04:01 PM
#19
Russell Lewis
Realty Austin, Austin Texas Real Estate - Austin, TX
Broker,CLHMS,GRI

Great post, I have bookmarked to pass on to clients. I do not have the same gift of explanation regarding loans that you do and appreciate the help in articulating these issues. Have a great weekend my friend!

Jan 16, 2009 12:51 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Jay - Agreed.  I like that approach.  Speculation, while sometimes rewarding, gets more folks into trouble than it helps in my opinion.

Jennifer - Thank you sweetie;)

Chris - Yes they are if they act rather than wait and loom.  At the very least, folks need to get their applications and supporting docs in now.  You can't lock without them.

Audrey - You do know where to send those folks, right:)  I agree in that we may never see them this low in quite sometime or again in our lifetime.

Joe - Thee of little faith.  No "mellowing" on my end, just solid info every once in a blue moon:)

Neal - Volatile has described things for a very long time.  If it's available now, take it!

Belonger - Isn't it odd that this was on both of our minds?  I think it is on a lot of minds because we are seeing folks speculate and know inherently it could turn out to be a mistake.

Gary - Absolutely!  At least do that part.  If you want to wait, fine.  But get your butts in gear and get the application and supporting docs in now!

Jeff - Then get your application and docs into lender(s) now.  That way you can lock if the market gets there.  I know this reputable guy in Allentown...

Fred - It has to be right.  Thank you Darth Chamberlin.

Dave - You sound like a shrewd homeowner indeed.  Good for you!  That sounds like an excellent deal you got.  Consumers (all of us) could learn a lot from what you just wrote.  I hope you stop by more often:)

Russell - Thanks!  And I do not have the gift to make such killer BBQ Sauce.  Thanks again.  Great stuff!!

Jan 16, 2009 02:28 AM
JL Boney, III
Coldwell Banker - Columbia, SC
Columbia, SC Real Estate

It's hard to say where everything is going to end up, but if you have a chance to get a deal, it's certainly well worth taking into consideration.

Jan 16, 2009 11:24 AM
Michael Delp
Mortgage Pro - Telford, PA

Do you have a 3 year interest and principle free mortgage to ho;d me until the Mayan calendar runs out?? I am self employed and in the mortgage profession so I can show no income! Do you have a loan for me??

Jan 16, 2009 12:09 PM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

JL - Almost impossible (for sure) to tell.  All I am saying is get your proverbial ducks in a row.

Delp - For you, anything.  I've always liked the beard.  And something tells me you are one of the good ones who shouldn't be washed away.  Big banking sucks; I always liked the idea of portfolio lenders to constantly be in the mix.  The Government can control our paycheck, but it can't/shouldn't control our lives.

Jan 16, 2009 02:22 PM
JB Brookman
JB Brookman Photography - Franklin, TN
High School Senior Portrait Photographer

Awesome post, Jason!  Agreed... possibly coming soon are the days of the mandatory 60 day locks and waiting months to close refinances- a la the early 2000's. 

Jan 24, 2009 09:12 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

JB - Thanks.  You may be right.  Bottom line for folks, get together all your documenation now!

Jan 27, 2009 02:10 AM
Ron Withers ----Retired Mortgage Professional
Kissimmee, FL

Jason...good job and congrats on making MWIR!

At the end of the day for any prospective and "committed" homebuyer. Get-R-Done!  If you have the financial capacity and can negotiate the right deal on the right property get with your loan officer/broker now. In waiting for more favorable rates to arrive it is more probable that you will regret your decision to wait.  Times are changing, guidelines are changing, you may qualify better today than you will tomorrow. Don't lose a great opportunity for a fractional rate decrease.

Jan 27, 2009 05:21 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Ron - Thanks Ron.  While the right time is different from person to person and family to family, I do believe hesitation can cost.

Jan 27, 2009 05:55 AM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Jason, Great post. I hope consumers will read it and call you. I would love to reblog it.

Feb 08, 2009 12:29 AM