Dec 5, 2018
It's not unusual for me to get the following call:
Hi, this is Henrietta Homebuyer. I'm thinking about buying a house and I want to know your interest rate and closing costs.
While interest rates and closing costs are certainly important, the better question to ask your mortgage pro is: How are interest rates behaving right now and why are they behaving that way?
When you ask a loan officer, "what's your interest rate?" they're probably going to tell you what you want to hear. And you know what? It doesn't matter. Because unless you have a fully executed purchase agreement and you are ready to lock-in that interest rate, the interest rate is no more than an estimate.
Interest rates change every day - sometimes multiple times per day. I can give you an interest rate quote today. But that doesn't mean I can get you the same interest rate for the same price tomorrow morning.
And for most folks, it really doesn't matter. If you're getting a conventional or government loan (and most folks are), the market determines the interest rate. Individual banks and mortgage companies follow the market and interest rates should be pretty similar across the board.
What you want to determine is whether or not the individual loan officer you're working with understands the way the market is behaving and why. Because a good loan originator studies the market and the market movements. A good loan originator knows when to lock-in that interest rate to save you the most money. "What's your interest rate?" on the day and time you happen to call is irrelevant. Because your loan originator should watch the market closely to determine when to lock-in your interest rate to get you the most favorable terms. That might be today, tomorrow, or two weeks from now!
Without getting into a whole bunch of boring information about Fannie Mae coupons, mortgage backed securities, and candlestick charts, you want to work with someone who is paying attention to charts like this, monitoring the market, and determining the best time to lock and the best time to wait.