If you have been paying attention, mortgage rates are great right now. Several days this week you could have locked a rate below 5%, depending on your scenario. We haven't seen rates like this in several years.
So who benefits from these low rates? This article is not going to get into FICO scores and loan-to-values. The people who benefit from low rates are primarily clients who have a solid working relationship with a mortgage professional. Consider this scenario ...
- 9:45am: Ratesheets show great pricing on mortgage rates. Loan officer (L.O.) calls clients that could benefit from these low rates.
- 11:15am: Client calls L.O. back to ask questions. L.O. is on the phone.
- 12:03: L.O. calls client back. Client is out to lunch.
- 1:10: Client calls L.O. back. L.O. is in a meeting with a new client for the next hour and a half.
- 2:50: Loan Officer calls client back, and finally gets client on the phone. At this point, the market hasn't done well on the day and rates go up .25%. Rates change daily, even several times a day. In this scenario, EVERYONE loses.
So how can this be avoided? By having a working relationship with the professionals you surround yourself with, in this case a mortgage professional. Imagine the same scenario above, BUT for each client that the loan officer is working with, there is a target rate/points scenario designated, so that the moment the ratesheet allows, the loan is locked in, in a matter of a few minutes. Who wins then? EVERYONE.
There are a few reasons why this scenario isn't more common. One reason could be that the client doesn't trust the loan officer enough to "commit" to this scenario, even though it is 100% free. Another reason could be that the loan officer doesn't have this ideal scenario anywhere in his mind, so a pre-emptive strike would be impossible. The relationship in this case can only hope to get lucky. It has been shown countless times that when the media reports low mortgage rates, it is almost always to late for the consumer to benefit. Rates have already gone up to where it isn't beneficial to the consumer.
Mortgage professionals are just like realtors, lawyers, accountants, financial planners, etc ... there are tons of mediocre ones out there, some bad, and some really good ones. Having a network of your own professionals, even as a regular 'ole Joe from Anytown, USA, you can bring about much more financial success for yourself. By working with such professionals, you create a scenario where financial success for you isn't a flip of the coin. It is a predetermined decision. It isn't a question of if the right scenario will come about, it is a question of, "Am I ready for that scenario at the drop of a hat?"
by Steve Kappre
Steve Kappre is a Certified Mortgage Planner in New Jersey and can be reached for more information at 856-419-3561 or via his Mortgage Website.