Just before 5 tonight I provided a Good Faith Estimate along with a Total Cost Analysis comparing four price points for a 30 year fixed rate purchase closing at the end of March. You see most lenders are not allowing locks to take place “after hours”; you have to wait until the markets re-open in the morning. This home buyer is still shopping rates with various lenders and so when she calls them tomorrow, my estimate is either going to look outstanding because rates have increased (and I won’t be able honor it since it’s not locked tonight) or I’m going to look like a mooch with higher rates because the market has improved. Unless rates are unchanged, the rate on my good faith estimate is worthless.
Selecting your mortgage professional by rate is a tricky business. Mortgage rates are based on mortgage backed securities (bonds) and change throughout the day…especially lately. I’ve seen as many as 6 inter-day rate changes from one lender in the past few weeks, so how can you choose who your mortgage professional will be by a constantly changing factor?
I provided the home buyer with the quote she requested and recommended that she obtain rate quotes as soon as possible based on a 60 day lock since she’s not closing until the end of March. A 30 day lock is priced better than a 60 day lock.
There is so much more to the mortgage process than what the current rate (or quoted rate) is. Actually, I view that my role as a Mortgage Planner continues long after the transaction closes.
If you must shop lenders, determine if they’re qualified to care for one of your largest debts by interviewing them and asking just a few simple questions they must know the answer to:
- What are mortgage rates based on?
- What is the next economic report or event that can trigger interest rate movement
- When the Fed changes rates, how does this impact mortgage rates?
- Are you licensed or do you hold any industry certifications?
I’ll share the answers with you on a follow up post.
I hope I am a hero tomorrow…hopefully I’ll have a chance to update my rate quote.
Rhonda
You don’t have to wait because your already are a hero. In just writing your blog–this blog post–you are being truthful about how the market works. People need to know and understand that rates change very very quickly.
And besides, as we know, it’s not about the rate.
How did it go?
I don’t know how this will turn out. Last I heard the home buyer is still shopping and just one of lenders I work with today provided 4 intraday rate changes to the worse…so in a borrower’s eyes, my estimate looks great. BUT…those quotes are for yesterday..4 rate sheets ago. If the rate’s not locked…it’s gone.