Taking out a mortgage loan without going mad

Filed in archive becoming a better borrower on July 6, 2009

There's one secret to taking out a mortgage loan without losing your mind: Don't obsess over those mortgage interest rates.

Unfortunately, this is the one piece of advice very few borrowers listen to.

You can't really blame homeowners for focusing so intently on what their mortgage interest rate will be. You can track rates easily on the Internet. The newspapers print them like baseball scores. And everyone knows: The lower your mortgage interest rate, the lower your monthly mortgage payment.

The problem comes when home buyers try to time their buying decisions to coincide with the lowest mortgage interest rate possible. This is tricky stuff. No one really knows when interest rates are going to rise or fall. If your mortgage lender tries to tell you that he or she has a feeling that rates are going to jump in the next week or two, the odds are that this "professional" is trying to goad you into a quick loan purchase.

Buyers can drive themselves crazy trying to predict the interest rate falls and rises, all in the hopes of securing a 5.4 percent interest rate on their 30-year fixed-rate loan instead of a 5.5 percent rate.

Truth be told, there isn't all that much difference in your mortgage payment with such a small swing in interest rates. The stress of trying to time your purchase just isn't worth it.

The Chicago Tribune on the 4th of July ran an interesting story giving advice to borrowers on how to best navigate the mortgage-loan process without going bonkers during it.

One of the story's best pieces of advice: Don't try to predict which way mortgage interest rates will go in the future. If you find a good rate that works for you, take it. Don't bet that rates will fall next week. They might just rise.