The Rate! Squawk! What's the Rate?

Among other things, success in life comes from asking the right question. When it comes to residential lending, most of us go with the default question 'what's the rate?' So what's wrong with that? Hmm, where do I start.

First, rate is meaningless without defining a number of parameters. As a mortgage professional, 'rate' is a said note rate - not APR - for a specific term, for a specific loan program, for a specific loan amount, with a specific credit score, for a specific property type in a specific state, for a specific purpose, locked for a specific number of days, at a specific cost for that rate. etc. Otherwise it is meaningless.

Second, speaking of meaning, while rate matters, it is not the only factor, or sometimes even the most important factor, in deciding your best course of action. Are you saving money over your current payment? Are you paying off high interest, high payment debt? Are you getting someone off the loan, like your ex- ? Are you better off taking a higher rate and lower costs? Do you need funds for a business or other investment or purchase?

Simply put, rates do not exist in a vacuum.

Prioritize the situation first, and you won't go wrong.

Don't be that person making payments on a 6.500 % loan who watches much lower rates go by while hunting for that unicorn rate.

Or the person who passes on their dream home in Denver, CO because their magic rate number isn't there. Meanwhile three years later the house price has jumped by almost half, and no rate will begin to make up the difference.

Or maybe you are paying stupid interest on consumer debt, with payments that are high and don't even pay it down much, but still pass on a cash out refinance because the rate is 4.500 and you want 3.75. Meanwhile your other debt is at 12 % or 18, or 24 or higher, and you can't even write it off.

In other words, rate matters, but it is not always the # 1 or even # 2 most important factor.

Okay, so how are the rates Paul?