But What If Mortgage Rates Get Lower?

Mortgage and Lending with Mortgage Banker

That is the question I have been fielding from my clients for a month now.  Don't get me wrong,  it's a great question.   But it leads many consumers into a state of "rate lock paralysis."  Many people don't want to lock a rate today out of fear that rates will be lower sometime in the near future.   There are two things I say to these types of borrowers:

  1. I remind them about all the clients who missed out in January of 2008 when rates hit 5.00% for only a short while.   I had dozens of clients who could have saved $200,  $300 and even $400 if they had refinanced down to 5.00% but they wanted to "wait for a better rate."  Well,  that better rate never came and it cost some of them $4,000+ in potential savings over the following 12 months.
  2. Just like when you invest or even belly up to a blackjack table........take some profit!   For example,  if you have a mortgage rate of 6.5% right now on a $300,000 mortgage and today you can lock in an interest rate of 5.00% that is a monthly savings of $286/month!   Most of the mortgage refinance deals I am doing right now come with no closing costs, none.  So why not take the 5.00% and if rates drop lower we can do it again.  There are no closing costs what so ever,  so why not take the sure thing now and lock in the savings and still have the potential to refinance your loan again later with no closing costs.  

Right now I am far too busy to spend time convincing people that saving $300/month is a good deal and they should lock.  There are plenty of people who are savvy enough to understand the benefits of locking into these low mortgage rates.  So if you or someone you know is just sitting there on the sidelines waiting for that magical 4.5% that the press keeps talking about,   call your local mortgage banker and GET IN THE GAME.  

I leave you with this thought.  How would you feel if rates went back up to 6.5% tomorrow and never came back down?   Pigs get fed, hogs get slaughtered.   I wish everyone the best while we continue to sail in uncharted water and as always please contact me if there is anything I can do to help.


Jennifer Brinson
Mortgages Unlimited, Inc - Eagan, MN

I have been dealing with much in the same as a loan officer myself. Well put!

Feb 05, 2009 06:42 AM