 Locking Rates and the Hope FactorMonday, August 25, 2008 - Article by: Paul M. Johnson -
When a borrower becomes hesitant about locking rates it is usually from the simple fact they believe the rates could go lower and while there is plenty of information out there to determine, with some certainty, the movement of rates I always respond with my opinion and then the question "Does the rate meet your payment objective?" If so then lock, it really is that simple. When the decision to lock has been made there are three possible outcomes; 1. Rates drop - ok, not good 2. Rates remain the same - No worries 3. Rates go up - Lucky me I locked! Like the song says "Two out of three ain't bad" When someone chooses not to lock they do so with the HOPE that rates could go lower. They are betting on the market. Neither borrowers or Loan Officers are traders and while the decision to lock should be a joint decision between the borrower and Loan Officer the question still stands "Does the rate meet your payment Objective?" Because not locking and having the rate gap up by .25% to .325% is never good and then if you lock that day is it based on logic or emotion? Remember, few, very few day traders make money and the market is never wrong. Copyright (C) 2008 Pau M. Johnson All Rights Reserved. Paul M. Johnson is the Sr. Home Asset Advisor with Texas State Mortgage Consulting a A Home Asset Advisory Firm based in Texas. For questions concerning this article or its content please contact Paul M. Johnson. |
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