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Rate Tornado

By Michael Neef

The only way to describe the current climate of interest rates is to compare them to another natural disaster. Much like Tornadoes, volatile Interest rates are hard to predict. Usually by the time a tornado hits the news, the worsted of the storm is over. In 2003 we had a few perfect storms and few ready homeowners where able to score interest rates as low as 4.5%. However these windows of opportunity were at best 2 hours long and only the prepared survived. Stock up your cellar, lock down the doors and find your religion because it’s storm season.

So what can home owners/buyers do to prepare for historicly low rates this year?

1. Find your religion: Every home owner has different view and goals for their home. Do you want to lock yourself in the same storm cellar for 30 years or are you planning on upgrading a few years down the road? Structuring your loan correctly has become more important then ever with so many family struggling to make ends meat.

2. Find a Mortgage Professional that is interested in your goals: A good Mortgage Professional can break down the cost of each loan and give you a cost analysis of each program. They can also explain to you the advantages of each program and explain where each loan will provide the most benefit.

3. Stock the cellar before the storm hits: Filling out an application and having a Mortgage Professional structure it correctly before your rate is locked can take hours or even days. If you wait until rates drop to begin the process you may have missed your chance. A loan cannot be locked with out a complete application, so even if it is months before rates hit your desired range or you find your Dream home, get the application in to be prepared.

4. Set a bottom line: If rates drop and you have not already created a fail safe mechanism to act immediately, you may be too late. A lock agreement should be established with your Mortgage Professional in writing. Too many times homeowners miss their opportunity to secure a better mortgage because they could not be reached or they were indecisive during the short window of opportunity. Details of the lock agreement should include a specific program, rate and cost; ex: ”If 30 year fixed rates hit 5% at a cost of 1%, LOCK ME IN!”

Its time to prepare for your future; so don’t get caught out in the rain with other victims in this market place. Unlike the weather mans ability to accurately predict weather, volatile rates are the one storm we can count on this year.

For more information, please feel free to contact me.