1 Week VS 3 Months
When do I lock in my interest rate? That's a pretty frequently asked mortgage question, and comes up on just about every loan file we work with. The truth of the mortgage industry is that most loan officers will feed customers the line that goes something like "If I had a crystal ball I'd be sitting on a beach somewhere sipping a mai tai". Those are loan officers you don't want to work with.
There are other loan officers that say "the decision is yours, I'd recommend you lock, but I leave it up to the customer..." - that's a lazy way of saying "I'm not very good at my job".
Then there are the people (loan officers and Realtors) who are perpetually standing in the sunshine. Those loan officers you've seen "Rates have hit all time lows!!" marketing from...for the past 3 years straight. Those Realtors who, if they had a time machine and landed in 2007, would still be shouting from the rooftops "it's a great time to buy!"
And then there are the professionals. A professional, experienced loan officer follows the market. No, they don't have a crystal ball, but they know enough and have seen enough to understand how the market works, and what the odds are when it comes to market direction. A good analogy is the professional poker player VS the nube that's had 3 too many vodka redbulls and is going all in on his 2-7 off suit. The pro is going to win in the long term, and be right more than they're wrong. The 2-7 guy? He may win a hand, but over time, he's going bust, without a doubt.
A professional may not rush you to lock, and may be pretty blasé to the daily market (as I am right now) - but when they pro calls you to lock, you need to answer the phone. You can't wait a day. Or you do so at your own peril.
Back in September we had a window where rates dipped to, quite literally, their all time low range - touching just a hair above the actual bottom we saw a few years back. Just a week later? The opportunity was gone. The chart here shows how short that window was - a period of time when rates broke out of their trend and offered people rates in the low 3's at no cost (I locked in my lowest 30 year fixed rate loan of my career in this window - a 3.125% with no points). I called many clients that could benefit, and benefit they did. A few clients didn't respond right away. Others got back to me a couple weeks later. Too late.
I don't often bug people about refinance opportunities - I'm a fiscally conservative, cost-better-damn-sure-be-less-than-return-in-a-very-short-period-of-time kinda guy. I don't want to "pitch" you when I call. I want to present you with an opportunity I've already analyzed, considered, and run various scenarios on to determine that refinancing is a no brainer for you.
It's been 3 months and we haven't seen a repeat of that 1 week's gains. As you can see in the chart (it's a complicated chart, but basically, the higher the chart goes, the better rates are, and green bars = good days and red bars = bad days), rates took a beating immediately following that week. OUCH. Every client that didn't return a call is now paying too much for their mortgage. Every client that answered and completed an app is sitting pretty with an amazing rate - several ditched PMI. There was a ton of benefit to be had, and it lasted a little less than 1 full business week.
The point I'm trying to make here is that a mortgage professional may not have the lowest rate on a given day you're buying a home or refinancing. But they will have market knowledge - the kind of knowledge that can save you thousands of dollars and ensure you're always in the best loan - because they do have a crystal ball. They know the market, and they track it. They track their database, so if you're their client, they KNOW what rate will benefit you financially, and how likely we are to see that rate in the foreseeable future. And when the rate hits? You'll get the call. That cut-rate lender you found on the internet? They'll be sitting in a cube on their headset waiting for the next inbound call or internet lead to come in (if they're still in the industry). They've forgotten about you. But the experienced professional won't.
Want to get the best mortgage in the long run? Work with a pro, and don't skimp to save a few bucks up front. An experienced professional that knows the market and is looking out for you and your finances is worth more than .125 in rate on a given day. They're worth more than a couple hundred bucks in one-time cost. I'd never advise that "the more expensive the better", but I would tell you that if your lender can't explain the markets, rates, and what is likely to happen in the foreseeable future - then you're working with the wrong lender.