I guess I will fall back on the line, we agree to disagree. Once more, if I implied that I could predict the performance of the bond market, I didn’t mean to. What I am trying to say is that I would AND do, absolutely look at the yield all the time. It actually dictates my periods of serious looking and making offers verses looking and NOT making offers. Through the winter and spring I did make a few offers (lowballs that all go rejected) on homes I liked. However as of about 3 weeks ago I got chased out because the yield pushed rates beyond my budget (for the price I need to pay to get in the home I want). When the bond market gains some momentum and comes back down then I will start seriously looking again.
Again, I don’t (and I believe have never) ever claim to be able to predict the behavior of the yield. Yet I can honestly say that to have signed a purchase contract in April or May while the yield was trending like it was, AND then float a loan, well… I personally would not have done it, NOR would I have recommended anyone else do it.
Anyone that has seriously spoke to these sales agents at the builders knows how these people work. I believe that the percentage of people who float the rate is staggering, like 90% or something like that. No I don’t have stats but that is from a conversation I had. Think about it, many if not all of the phase releases are WAY in advance of the completion of the home. No lender, preferred or non preferred will lock a loan for that long.
Rustico – On my personal purchases I have never ever floated a loan. I get that sucker locked immediately. So to answer your question, before I even sign a contract, I make sure my mortgage broker has a very precise rate for me. Then I add a fudge factor to see where the rate can move up to in the next few days so that I know EXACTLY what my rate and payment will be. Any mortgage broker will tell you that they receive rate sheets on a daily basis, obviously because they vary with the 10 year. Yet, it is hard to imagine a rate moving more then say 1/4% in two days. That would reflect an extraordinary movement on the market, but we did see that. Anyways, usually to get a lock any more then 45 days is gonna cost you. Any more then that, and I am not sure that it can even be done. I think one time I saw a 90 day lock but it may have been a point or two.
