Looking at mortgage rates on the internet? Maybe your shopping in the Zillow Mortgage Marketplace, on Lending Tree, or even in the newspaper. One thing you should understand is, unlike milk, the mortgage rate quote "purchase on or before" dates do not extend for 3-4 days. Mortgage rates change as often as 2-5 times each day. Why is that?
READ: You'll NEVER get the lowest rate on your mortgage.
Mortgage rates are a dynamic market, based on mortgage -backed securities. The volatility in mortgage bond markets is wildly erratic, especially in financial crises. With European countries facing bankruptcy, perpetual war in the Middle East, and a debt-riddled US economy, things change...a lot...and more than once or twice a day.
We used to be able to "eat" those price movements, if they weren't too erratic, after we quoted your rate and before we locked it in for you. A new federal rule, Regulation Z, prohibits us from adjusting our compensation, to your benefit, when the market changes. If the market changes for the worse, you get stuck with the higher costs. Conversely, yoou get rewarded with the lower costs if the market improves. Essentially, you bear the risk and I am protected. So much for the "consumer protection"of regulations. Don't get me started down that path or I'll digress into the politics of mortgages.
What can you do to protect yourself?
Well, if you have three quotes, and you are pretty sure that you've narrowed it down to 2-3 lenders, ask each lender to e-mail you a good-faith estimate, all at the same rate, at a specified time. Then open your email, find the best one, call the winning bid, and lock-in the rate.
The key thing to remember is that the good faith estimate you receive is probably only valid for 2-8 hours. If you're on-the-ball, act quickly, and are dealing with an originator who follows this market like a hawk, you'lll get a great deal.
