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Wednesday, June 29, 2016

When is the "perfect" time to lock your mortage rate?

Know How To Recognize A Good Mortgage Rate

Mortgage lenders are often asked if there is a best time of day, day of the week, or period of the year when a prospective borrower should lock in a mortgage interest rate. 

The truth is, no one can tell with any degree of accuracy what rates will do.
In fact, the best time to lock a mortgage is when the unexpected happens.

Case in point: Brexit
Recently, Britain voted to exit the European Union. “Brexit,” as it is known, caused an international "flight to quality," meaning investors worldwide sought perceived safe assets like U.S. mortgage bonds. Mortgage rates fell dramatically.
These unforeseen shifts are the best time to lock a mortgage. But what if you’re not fortunate enough to be rate shopping during a period of mortgage rate upheaval?
Then, you go into the process knowing how to recognize a good rate, and being ready to lock it in.

Locking The Perfect Rate Is Like Hitting A Moving Target

Purchasing a home could be the most impactful financial decision you will make in your life. You want to capitalize on the lowest possible rate.
In an ideal world, you would know when to pull the trigger on a rate lock with perfect timing -- assured in the knowledge that rates have hit their relative lowest point. But with interest rates subject to change daily and even hourly, choosing the right time to pull the trigger on a rate lock can be difficult.
This is a matter best discussed with experienced mortgage expert who can review your unique situation and suggest relevant options.

There are certain dates on the calendar and other factors that can help guide your decision.
Data suggests that mortgage rates are most stable on Monday's versus Wednesdays and Fridays, when rates are most skittish -- per research from mortgage market analysis website MBSQuoteline.

However, many professionals agree that there are certain dates of the year on or immediately after which you should be watching the market.
These include the first Friday of every month, when the U.S. Bureau of Labor Statistics releases its jobs reports and days when the Federal Reserve holds its policy meetings.
Fed meetings last two days, and consumers should be ready to lock after the meeting adjourns on the second day. At meeting’s end, the group releases its statement. Rate-favorable news found therein can drive down rates dramatically.
Meetings for the remainder of 2016 are as follows.
  • July 26-27
  • September 20-21
  • November 1-2
  • December 13-14
Although it can be smart to pay attention to events that can affect the interest rate market and seek advice from your chosen mortgage professional, deciding when to lock in your rate is ultimately up to you.

KEY QUESTION:  Ask yourself-would you be more uncomfortable if you locked in and rates went down, or if you didn’t lock-in and rates went up?”

My golden rule is to lock in as soon as you have a scenario that works for you.
But don’t second-guess yourself.  When you have made a decision to lock, LOCK AND DON'T LOOK BACK is what I tell my clients.  We have done the best we can with the information available to make a decision about locking. 

Determine your risk tolerance and decide on your strategy about when to lock prior to making a decision to lock.  Determining your risk tolerance is key!