Rates – Legalized Gambling

Example of a Blackjack game. The top half of t...
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Sometimes I feel a bit like a glorified dealer at a Blackjack table.

I quote a rate on a 30 year fixed mortgage and offer a customer the option to keep the rate or gamble that rates will improve further.  “Hit or stay?” I say with my cool green visor set askance to the side at a jaunty angle.  The customer looks at me hopefully for some sort of clue as to what cards I hold and whether he should stay or take another card.  I shrug my shoulders and explain that no one ever truly knows what cards will be dealt to dealer or client alike.  My customer wipes perspiration off of his forehead, looks for support from the patron next to him and begins to twitch noticeably.  He lights a cigar and is aware that everyone seated at the table is waiting for him to make his move.  His chips are not substantial – one wrong move and he is done for the night.  With a flair for the dramatic, he asks for another card.  Bust.  Should have stayed.  With a quiet dignity, he exits the table and heads home for the night.  All that is left is the smell of his cigar and the awareness that chance is not always kind.

On any given day, customers are looking for some clue as to what the market will hold for them.  Is it best to cash in gains and lock in the current rate or is it better to take a chance and hope that the market improves further?  There is no “correct” answer as rates are influenced by so many things.  As a Loan Officer I can tell clients what financial events are on the horizon but the markets are human emotions on parade as much as anything.  In other words, strategy can only go so far.  As is the case with cards, we don’t truly know what the next turn of the deck will hold for us.

My advice to consumers is to pick a rate that works and “lock in” if that is available.  If, by chance, you are able to enjoy some gains in the market, don’t wait too long to cash in.  There are always risks – pick a strategy that you are comfortable with and talk openly with your Loan Officer.

You can always grab your cigar, bet big and hope for the best.  The element of risk is inherent and if such is your liking, you may as well enjoy it.  Just be careful – this turn of the cards will last 10 to 30 years.


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