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Mortgage rates should decline, in the near term. I’m changing my recommendation from lock all loans to float all mortgage applications, if the loan is closing more than 14 days out. That means that if you’re scheduled to close on your mortgage, before April 15, 2008, you should lock your mortgage rate.

Fed Chairman Bernanke spoke to Congress this morning. I’m one of those weird people that actually watch the Fed Chairman’s testimony. I look for a twitch, a nervous tic, or a tenuous posture, in addition to the text of his testimony. I’m as screwed up as the bond traders on Wall Street. That was my world; I can’t change who I am now. Well, Bernanke thinks a “contraction” is underway. In Southern California, we call that a recession but we’re awfully dramatic in Southern California. Anyway, ~~recessions~~ contractions lead to lower mortgage rates.

Want to see how effective my lock/float recommendations are? It looks like I’m always a tad early:

Let’s see:

1- I came into the new year, floating rates.
2- On January 8, I advised to lock. I was early, you could have improved your rate by an eighth.
3- I floated on January 17- bonds improved a full point, then dropped a half a point
4- Pulled the trigger to lock, on January 24- bonds deteriorated- rates went up.
5- Stayed locked (but pointed out the ten-year ARM value) throughout February
6- Went to float, on March 6- bonds improved 3 points, and mortgage rates fell .5%, during that time
7- Have had all loans locked, since March 21-

I’m not bragging, I’m doing my job. The value of a mortgage planner, who watches the CORRECT influencing factors, can save you an eight to a quarter point, on the rate of your mortgage. This means that my advice can save you THOUSANDS of dollars, over the life of the loan.

If you’re watching the “points", a stronger bond market can save you a lot of money, on closing costs. Clients who made an application, on March 8, received a 2% rebate, from the lender, because of my prowess, by waiting until March 21 to lock. Even worse, those loan applicants that didn’t engage me, in February, may have paid as much as 2% MORE, in closing costs, than my clients.

Advice and execution is the value of a skilled mortgage planner. Ask originators to prove the value of their fee before you hire them. I’ll gladly do just that.