Thank You Mortgage Professor!

If it hasn’t happened to you, perhaps it has happened to someone you know. While interviewing potential lenders, whether to refinance or buy a new home, it is puzzling at best to discern what the various quotes mean. For example: (1) why is an interest lock free at one lender, but costs 1/4 pt (.25%) at another?; (2) why is the interest rate quoted in the good faith estimate (“GFE”) you were given not allowed to “float down” as interest rates fall prior to your closing?; (3) how do the various lenders cook up the various combinations of interest rates and loan origination fees (“points”), and how can you possibly compare them?

The Mortgage Professor’s tool/table, which shows WHOLESALE loan trends, may not answer these questions specifically, but may allow you to go toe to toe with lenders that you think are blowing smoke. As an example, and we hear this too often, our client might obtain a “no fee lock” on their new loan 30 days prior to closing. When our client hears about falling interest rates at another lender he might ask his loan representative if his rate will go lower. Too often the answer is, “you’ve already locked in your rate, there’s nothing I can do”, or “that’s just an offer from that lender to try to get more business and they are likely making up for that rate somewhere else”. This is standard parlance for, “you are on my hook, and I would prefer that you stay there and stop wriggling around”.

The fact is, rates change every day. It is a gamble as to which direction they are headed on a daily basis, but trends are notable. For the first time, you now get a peak behind the curtain to see what the lenders see: an amalgamation of the wholesale rates offered to lenders on a daily basis.

Sunday’s Seattle Times’ syndicated columnist, Jack Guttentag, has provided us with maybe the best mortgage rate tracking tool ever offered to the public………FOR FREE! Trust me when I say this is one link you will want to bookmark. The information is provided in that little unassuming table at the center top of his home page titled:

To appreciate the value this information, read the accompanying Sunday Times article: “Wholesale price data used to gauge market”.