I just ran in to an old friend (well, not old but….) the other night at a gathering over the weekend and she teased me “Rob, I think that we are ready to refi.  I want 4.5% and no points!”.  Doesn’t everyone?!

I thought about this a bit.

Now, I could start out by saying that 4.5% mortgage rates are a dream…fantasy perhaps but, the truth is, I don’t know if they will happen.  Everything that I read and all indications that we get from watching the financial forces that directly effect mortgage rates tell us that they are EXTREMELY unlikely.

In the meantime, I thought that it might be a good idea play devils advocate a bit and share some reasons why waiting for a lower rate can be a very bad move.

Here then are some things to think about if you want to play the “waiting game” on rates.

  1. You could lose your job.  It’s not a pleasant thought but it is happening to a number of people today.  Without a job, lenders are almost never willing to lend.
  2. Lenders could change loan-to-value criteria.  There has been a trend towards more and more conservative lending for the last two years.
  3. Lending guidelines could tighten.  This point is very similar to the point above but speaks more to the myriad criteria other than affect your ability to refinance or get a purchase loan.
  4. You could become injured or ill.  No one ever expects to get sick or fall ill but it can happen and it can have a adverse affect on your income and ability to work.  It can also make it harder to keep up with the flow of monthly bills and expenses which effects…
  5. Your credit score could worsen.  This can happen for any number of reasons and if it does, it willl adversely effect the rate that you are charged for your mortgage.
  6. A nearby foreclosure could lower the comparable value of your home.  This can quickly kill an refi opportunity and can really put a monkey wrench in your ability to make a lateral or upward move into a new home.
  7. Lastly – rates COULD go UP!  They could!  The question is, if they did, what is your breaking point.  How far up are you willing to go and how much is it worth it to you to roll the dice. 

Bottom line, no one can make an exact prediction of mortgage rates and on the global mortgage securities market.  We watch the markets and offer very helpful guidance to our clients on where we think rates are headed.  We were trained to do this by leaders in our industry.  That said, neither we, nor the leaders that trained us, nor you can make exact or guaranteed predictions about where the market is headed.