The Main Reason Why Homeowners Can’t Get The Lowest Mortgage Rate

January 25th, 2012 |

Author: yroth

Can You Get The Lowest Mortgage Rate?

Everyone wants the lowest mortgage rate.

If you’re buying a new home or refinancing your existing mortgage loan, you want the lowest possible mortgage rate. And why not? So do I.

So homeowners will do their due diligence and shop around to different mortgage companies and get mortgage rate quotes in search of the lowest mortgage rate.

Here’s the problem.

The lowest mortgage rate doesn’t exist.

Let’s say you’re buying a new home and you’re scheduled to close on or before a certain date.

You have a time constraint so you can’t shop and wait around indefinitely for “the mortgage rate bottom.”

However, if you’re refinancing your existing mortgage, there is no such time constraint. So some homeowners will wait to find the lowest mortgage rate.

Here’s the problem: finding the lowest mortgage rate is like waiting for a stock price to reach a certain price point.

It might get there and it might not. Or it might take 3 years to get there.

If you were to look at where mortgage rates and their associated costs have been over the past 3 years – for example – there was 1 day out of the past 3 years that the “mortgage rate” was the lowest.

To try and game mortgage rates in search of the “bottom” is foolish.

Here’s what to do. Look at current mortgage rates and their associated costs. Ask yourself, “Is there benefit to refinance into that market mortgage rate?”

Are you lowering your mortgage rate? Are you lowering your mortgage payment? Are you reducing your mortgage loan term? Are you able to recover your closing costs in a reasonable amount of time?

If there is benefit, take it and lock it in.

To “game” mortgage rates in search of the mortgage rate bottom doesn’t work because the lowest rate doesn’t exist.

While mortgage rates change and you’re waiting for that elusive mortgage rate bottom to appear, you could be saving and benefiting now.

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