We have seen extreme amounts of volatility in the rate market, and it becomes increasing difficult for clients and referral partners to deal with it. Nobody has a crystal ball, and despite all the charts, graphs, and trend lines, it is still impossible to know what is going to happen in the rate market in a particular time frame.

That is why for the last year or so I have shared with everyone I speak with the philosophy of “if you like it and the payment works, LOCK IT and move on!” You can always refinance later down the road if the rate market relaxes, and you are protected against the market moving against you.

One of the things we can control is about how interest rates are only one piece of the payment puzzle, and that there are other considerations to think about beyond just the interest rate of the loan. We can address this in many ways, the simplest are product and terms. You can lower the rate any number of ways; improve your credit score, lower your DTI, reduce your LTV, change your loan program to name just a few. But you can also spend a little time looking into a few things that most people ignore, the other components of your monthly payment (and given it’s the payment you are qualified for) this is important to remember.

• Taxes – houses with the same price tag and value may often have different taxes. Often the second largest component of the payment after the P&I calculation, you must factor taxes.
• Homeowner’s Insurance – I can’t begin to tell you the number of people who NEVER review this critical part of the payment. Coverages and deductibles can often be controlled by the client.
• MI/PMI - may or may not apply depending on your loan, but if required, there may be options that can reduce or eliminate this part of the monthly payment.
• Flood Insurance – is it required to obtain or is it optional? You won’t ever know if you don’t check it out. You may have options!
• HOA fees – You may or may not have HOA fees associated with the property you are looking at. These can range from a few dollars a month to well into the hundreds of dollars per month. You need to be aware of this BEFORE you make an offer because you will be required to include this in your payment calculations. Remember, you are qualified for your loan based on your total monthly payment, not just the rate and terms of the loan!

So, when people want to only have the “rate” discussion, you need to respond by knowing that it’s about the PAYMENT and not the rate.

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