If the past six weeks has taught us anything, it’s that mortgage rates can and will move very quickly. And often in the wrong direction…yep, up, not down.
The same goes with gas prices, which were actually below $2 a gallon in the Los Angeles area in mid-January (yeah, I couldn’t believe it either), but have since risen back to around $3.50 for a gallon of economy.
The best part about these price swings is how complacent we all get. All of a sudden everyone’s driving a Hummer and splurging on premium.
When interest rates were low, a lot of borrowers were floating or thinking about letting now expensive locks expire.
Unfortunately, there’s not much we can do about gas prices, seeing that you can’t really lock in prices or prepay and store major amounts of it in your garage.
You just appreciate the lows and agonize about the highs. Mortgage rates are a different story.
Mortgage Rates Can Be the Gift That Keeps Giving
Mortgage rates are often fixed, meaning homeowners can take advantage of a “good rate day” and hold onto it for the next 360 months, not just their next fill up or two.
Sadly, the mini refinance rate boom that presented itself in mid-January has gone away once more. Whether it will come back again remains to be seen. History tells us it should.
All the way back then, the popular 30-year fixed was inching back down to all-time record lows, and actually made it to around 3.5% for the most creditworthy of borrowers.
That’s a pretty stellar rate, and the mainstream media was certainly aware of it, which is why you probably read about it or saw it on your local news channel.
However, fast forward a month and a half and rates are closer to 4% again. While a half of a percentage point might seem like no big deal, it could make or break the benefits of a refinance.
It could also disqualify someone for a mortgage if they were super close to qualifying thanks to affordability and/or DTI issues.
And if nothing else, it could mean that you’ll pay thousands more over the term of your loan if you missed out.
Don’t Procrastinate Next Time
During that golden time in January, I was out to dinner with some friends who brought up the low rates and the thought of refinancing.
I mentioned that it was probably a good idea if they could substantially lower their rate at little or no cost.
But it was just a conversation, and like most things, was only discussed and not actually acted upon.
It was probably one of many things that made its way to a to-do list, though nothing beyond that.
Now this isn’t to say that rates can’t march back down to January levels or lower, but they certainly aren’t there at the moment.
And just like gas prices, the move higher will happen a lot more quickly than the move lower. That’s why we probably won’t see gas below $2 anytime soon.
Conversely, if even the slightest of good oil-related news surfaces you could be paying $4+ per gallon to fill up your tank. So I hope you kept your Prius.
Remember, mortgage rates change daily, and sometimes multiple times a day. So don’t assume the rate your quoted today will be good tomorrow. If you like what you see, don’t take it for granted.
If you did miss out, keep an eye out for the next opportunity.