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Trying to “Time the Bottom” and Getting Burned

All of our borrowers wish or expect us to “time the bottom” of the market with respect to interest rates. And as a result, they are often reluctant to lock in a rate or are reluctant to get us the necessary paperwork after we do lock.

This is because they read accounts in the press about how rates are expected to fall, or about rates hitting “all-time lows.”

A few points in regard to this:

1. Nobody can “time the market” perfectly, and if we could, we would be billionaires doing something other than mortgages. Whether one is dealing with stocks, gold, interest rates, etc., timing the top and/or bottom of a market has always proved impossible.

2. The press reports invariably lag the market. The press uses “survey data” from days past for their news. By the time they report “record lows”, rates have often already moved back up.

3. Our borrowers who are obsessed with “timing the bottom” almost always get burned. We have a myriad of borrowers who refused to lock or to get us requested paperwork, and who are now out of luck. Rates have moved up and the rates we offered them are long gone.

Our final point: Take a good rate while the getting is good. Do not “wait for the bottom”. If rates come down again, you can always refinance, and often at no cost.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167