Joe Wilson's Silicon Valley Real Estate Blog

The recent volatility in the banking system has also created new volatility in long-term mortgage rates. One day an ominous report comes out that scares equity investors and the next day a different report comes out scaring bond investors.  Of course when equity investors get nervous, money moves to bonds typically driving long bond rates down but when bond investors get nervous, they demand a higher rate of return driving long-term rates higher.

So, if you're a prospective home buyer watching and waiting to lock in a great long term rate what should you do? Well, get pre-approved for starters. Pre-approval simply means the lender has formally verified your income, assets and credit and has determined that you're qualified to obtain a particular size and type of loan at that day's prevailing rate. Once you're pre-approved, rates will vary up or down every day until you find your home and "lock" your rate. By getting pre-approved up front, you can watch and wait and try to time your lock to obtain the best rate. If you haven't been pre-approved up front, the several days to one week delay in your ability to lock could cost you a better rate.