A mortgage, whether associated with a divorce or not, is heavily tied to rates. Your decision to move forward is likely dependent upon an interest rate that you can secure. After all, it determines how much you can afford. In the case of divorce, the rate can actually determine whether or not you can keep the marital home. Most of the time, there is some consistency to the rate environment and you can properly plan. Other times, like now, mortgage interest rate trends rule the day. Plus, the planning horizon between changes can be as short as 15 minutes. What, then, are you to do to make sure that you have the best chance of getting your deal done?
Stay informed about mortgage interest rate trends
Knowledge is power and when locking a mortgage you should generally know the state of the mortgage market and the likely trend. This can by a slippery slope and you can drive yourself crazy with over analysis, so you need to take measure the flow of information; but at a minimum, you need to have a working knowledge. Currently, for example we are seeing a unique trend where the traditional correlation between the 10-year treasury note and mortgage rates has ceased. External factors such as record applications are driving rates up instead of down as banks price to manage volume. Knowing and understanding markets like this, even on a rudimentary level can help manage your expectations. This is also a key time to work closely with you divorce mortgage professional for information and guidance.
Don’t panic if rates rise
A level head is essential in making the right decisions. Mortgage rates are going to rise and fall. This is something that neither you or your lender can control, fully anticipate or predict. You can, however, control your response and your decisions. Logic and strategic thinking over fear and panic will always put you in a better situation. When rates move take some time to understand the why and the context of the move. Get an understanding of the trend to fully understand whether it is a blip or a trend. Respond to the information instead of reacting to it.
Properly prepare your loan file and be ready for anything
If there is anything that the current rate environment can teach us is that nothing is certain. There will be amazing days where rates are low and others where they shoot up. Although you are never likely to perfectly time the market, you can increase your chances of having good timing by having everything ready. Work closely with your lender and have a full application completed. Submit the required documentation early and completely so that when you hit your strike price, you can execute quickly. Too many borrowers, wait to apply until they want to lock and they miss the boat.
As I wrote earlier, you will rarely be able to time the market. I have been lending since 2001 and I have rarely if ever predicted the bottom of a cycle, even for my own deals. I have, however, helped many clients manage their need to refinance or purchase with the rate environment to get the best possible outcome. Remember though, you own the mortgage when all is said and done. By remembering the aforementioned simple rules and applying them in a patient and logical manner, you can come out of a loan process with a great rate and your sanity intact.
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