Monday, July 01, 2013

Whither Goest Thou? A Mortgage Rate Questionnaire

This is a multiple-choice question quiz: which is true – A, B, C, D, or E?

A) If the headline reads MORTGAGE RATES ON THE RISE! it means it’s time to buy (quick) before they go up further!

B) If the headline reads MORTGAGE RATES FALL! it means it’s time to buy (quick) to cash in on the savings!

C) If the headline reads MORTGAGE RATES UNCHANGED! it means it’s time to buy (quick) while the rates are stable!

D) All of the above.

E) None of the above.

My answer is below (and it’s not even upside-down), but before anyone even looks down there, I’d like to mention that there is an equally valid second question, which would read ‘sell’ instead of ‘buy.’
This week is a good time to be pondering both questions. It looks as if the long-lived swoon in mortgage interest rates is about over. “Looks as if” is a carefully chosen phrase, because what seems inevitable in finance has a strong track record of proving wrong. One of the dangers that our current environment presents is that everyone has been correct (about mortgage rates staying in the cellar) for such a long time that they’ve grown accustomed to rates being predictable. They aren’t.

                                                                             So the answer to the question is (drum roll, please): E). 

It’s a trick question: when it comes to buying or selling a home, doing anything “quick!” just because of a one-week dip or rise in mortgage rates is a bad idea. It’s a big decision, one that should be entered into with care and forethought. But if you were to remove the “quick!” from the question, I’d personally tend a little more toward D), but only because I don’t think local mortgage rates are likely to fall right away. And rates today are still, historically low. 

Good time to buy, good time to sell. Thoughtfully.

By Gina Odom, Realtor