It has been forecasted that March 2019 will bring a big swing to mortgage rates. Which way they will swing is still undetermined, however. With that possibility of rates rising soon, here are some helpful tips to find the best time to put your mortgage application into the hands of a lender.
If your schedule is flexible, try and watch the forecasts that can be found with a simple Google search. There’s a good amount of information on rate predictions and trends out there on the Internet, so do your research.
Rates can drift downward for months, and then subsequently skyrocket in a single day. But what
causes these rates to rise? Markets always fluctuate depending on what will happen twelve to eighteen months from now. Even though inflation is steady, the stock market is approaching all-time highs, and unemployment is hitting record lows that rival the landscape of employment 40-50 years ago. As such, rates reflect what might be on the horizon.
Timing on a monthly scale is another thing to consider. Lender’s schedules work around a monthly business cycle. They are eager to sign new loans at the start of the month. This is because mortgage notes are only valid if they are signed within the same month that they are drawn up. This means lenders already finished up on all their work form last month and they are looking to acquire new clients. You cannot buy a house without a mortgage, so if you don’t want to miss the opportunity to buy the one you want, try and send in your application within the first couple business days of the month.
On the flipside, the worst time to apply for a mortgage is the end of any given month. Brokers may be too busy closing other deals to take on your application, so it might be best to just wait a week until the new month arrives. Now this doesn’t mean that you can’t apply – it just means that it is best to keep this monthly business cycle in mind so that your expectations don’t exceed the situation.
To ensure your home purchasing process doesn’t derail due to a mortgage snafu, try and lock in. Depending on the complexity of your loan, it could take as little as one hour to as much as a whole week to even get a contract signed. Then once you get pre-approved, the potential house needs to get appraised before they can finally start working on giving you the actual loan. The whole process is estimated to take up to thirty days. You can expect the process to take even longer during high-density months. There are a lot of times where clients won’t lock into the loan, and as a result they end up losing the opportunity to purchase the house that they want. Applying early will put you in a better spot with sellers, and help you to avoid those heartbreaking situations.
It is also important to consider the type of loan you would be applying for. Mortgages will take vastly different times to approve than construction or lot loans. Your location may have an impact on the length of time for approval. For example, New York has some different regulations than Texas. If you are looking for lot loans in Texas then you may have to prepare very different documents too. Timing, location and the type of loan are all factors in your loan preparation.
To apply at the beginning of the month, try starting the process of getting all your financial documents together a couple weeks prior. You want to stay as organized as possible. If there are any eyebrow-raising gaps in your financial history — such as periods of bad credit or unemployment — make sure to provide some detailed explanations right off the bat. This will speed up the process, ensuring you do no waste time and potentially put the contracts behind schedule.
Once you send off that application, anticipate delays. Some things are out of your control, and the best way to handle that is to leave some room in your schedule. In most cases, the process moves along smoother if you start applying for a mortgage right before you start seriously looking to buy a home. That way, you will know how much you can afford and have plenty of time to get all the financial obstacles taken care of in an orderly fashion. Mortgage rates haven’t been this low since this time last year, so it’s a great time to start the process if you are interested in buying a home. Rates tend to jump faster than they fall, so if you are thinking about refinancing or purchasing a home, jump right in while the rates are still cheap.
Adam Randle is a writer with First Western. When he’s not writing or thinking about finance, he enjoys fishing and classic cars.