Monday, October 6, 2008

Ordinary people suddenly get good deals on mortgages

I'm a first time homebuyer, and the ride is a blast. It's an adventure, an exploration, a learning experience.

I locked in my mortgage rate today, and I am feeling so proud of myself. And, since this is such a tiny bit of good news in the economic disaster we're living in, I haven't seen headlines of "Ordinary people suddenly get good deals on mortgages." So you heard it hear first.

I'm no economist -- I'm more of an intuitionist -- and I've never paid much attention to the details of how financial systems work (despite the evidence of my education). So the mastery of the art of mortgage prediction I gained over the past week has me feeling really smug.

This is what makes mortgage rates go down: bad news. I'm sorry to say that when the terrible jobless rate came out last week I jumped up and down. Heartless of me, I know. But I work in career services, so maybe I can atone for that one.

When the stock market fell I nodded in sympathy with others and then ran to my computer to see if mortgage rates had budged.

But the rates didn't drop. In fact, last Tuesday they went up and then didn't move. Banks still weren't lending money. No credit action, no mortgage rate change. So I waited until the House signed the bailout package. That could improve confidence and increase liquidity ... but it didn't. With my own good credit, I could get a decent rate on Friday, and I was tempted to take it, allowing me to take another step to closing on my new home ... and then I decided to wait.

When I saw the news that California was going to have to ask for a government bailout because of its inability to get short term credit, I knew that the end (to my mortgage rate wait) was near. Something had to move. And this morning the stock market crashed again, and the Federal Reserve indicated that it would considering using its new powers (from the bailout bill) to relieve the credit crunch. And Bank of America indicated it would find a way out of the Countrywide mess for people who were going to lose their homes, so someone was going to get mortgage relief.

I checked the mortgage rates practically hourly, and then, bam! at 9:30 AM PT today they dropped. A lot. I called my mortgage broker. I couldn't get through for hours because apparently he had five clients move to lock in rates today. But I did it! I didn't even take the lowest rate I could get (because of the fun and funky incentives I'm being offered by Pulte Homes). And rates fell a fraction after I locked. But I got a good one, a doozy, lower than I ever thought I could get on Friday.

I feel lonely. Despite my lack of interest in economics and finance, I love spreadsheets, and I've built all sorts of models over the last several months to help my decision-making and keep myself fact-based. Today it all came together, and I can't really share the great news, the great numbers. I know people who've bought in the past several months, and I know my rate is lower than theirs, so I can't celebrate with them. And people who are deep into homeownership aren't going to think it's so cool. But it's my first time, and I think I did a damn good job of it.

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