The Behavioral Economics Of Mortgage Rates // Today’s Mortgage News – Growella


I'm Dan on your inside team at Growella This is today's Mortgage Minute-and-a-Half

The hardest thing to predict is the future, but that's not going to stop people from trying According to government-backed Fannie Mae's most recent National Housing Survey, a survey of one thousand people nationwide, today's consumers pretty much guarantee that mortgage rates won't fall this year But should we believe them? No No, we pretty much shouldn't The track record for consumers predicting the future of U

S mortgage rates is terrible And, there's a reason why — a behavioral economics theory known as the Hot Hand Fallacy The Hot Hand Fallacy is when a person thinks whatever is happening right now is going to continue into the future In gambling, it's when you win randomly a few hands in a row and attribute that to a hot streak

Logically, there's no such thing and the same is true for mortgage rates Just because rates are up this year doesn't mean they'll continue that way forever It's just as likely that mortgage rates drop and whether rates are up or down for you on the day you need to lock is a just a matter of luck Don't try to make predictions about the future of US

rates If a rate looks good today, go ahead and lock it Tomorrow, it might be gone Mortgage rates hit the floor today and next thing you know, mortgage rates got low low low low low low low low For conforming loans, FHA loans, USDA and VA loans — mortgage rates are down today, marking the third straight day of improvements

Rates have been bouncing within a firl range for the last three weeks and quote you get from your lender will be based on your loan size, where you live, and how you're doing with your credit The way you structure your closing costs will matter, too Talk to two or more lenders and find the mortgage loan options that work best for you You can pick your friends and you can pick your mortgage rates, but you can't pick your friends' mortgage rates And you can't pick whether they pay closing costs or not, either, but if you could, you could affect the rate quotes they get from their mortgage lender

It's because closing costs and mortgage rates are related inversely As one goes up, the other goes down It's why paying one discount point to your lender will generally get you access to mortgage rates discounts of about an eighth of a percentage point off your original rate quote, and why choosing to pay no fees whatsoever will usually raise your rate by about that same eighth This second type of setup is what's known as a zero-closing cost mortgage and you pay none of your own costs when your loan's set up in this way Your lender pays them for you

And, yes, you're going have a higher monthly payment for the right to go zero-cost, but you do get to save your upfront cash for something more pressing So, which closing cost scenario is right for you? Talk to your lender and ask for help with the math Growella does mortgage news three times weekly and goes live for a session each Thursday Yes Live

It's amazing And you're amazing So, do us a favor and put a like on it, leave a comment, and don't forget that if you can dodge traffic, you can dodge a ball Hey, so what do you get when you cross a joke and a rhetorical question?

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