How can a buyer make an informed offer on a property when the interest rates are changing so dramatically.?

Asked by Tom, 90024 Wed Feb 27, 2008

In the past 2 weeks, the quoted rates have increased by 1% or more - on a jumbo loan. If I make an offer without a rate contingency, am I just subject to the whims of the interest market when it comes to applying for the loan? I have never bought anything without knowing the exact terms and price of the item. Seems like real estate is different.

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Corey Grushin, Agent, East Brunswick, NJ
Fri Apr 4, 2008
Tom as a loan officer unfortunately the Credit Crunch has really affected Jumbo Loan rates and as you have witnessed their are large swings presently. Since the day you asked your question rates have now swung back to where they have started from. That is today market place. In this case you are just subject to the whims of the credit market as long as it is deemed you can afford it. Your last statment about exact terms & price. The price of the property is controlled by you but the mortgage rate is subject to outside variables beyond your control. Rest assured knowing the rates have been swinging back & forth like this for the last 3 months.
Note. You can't lock an interest rate uintil you have a property in mind. That rate is not transferable to another property. If you can't get a mortgage because rates sky rocket you will not lose your earnest money. And the conventional loan limit increase really hasn't helped Jumbo loans rates yet.
2 votes
Jane Gopez, , Redlands, CA
Thu Feb 28, 2008

From the other side of the coin, I do appraisals all day every day and what I see it that location is key. If you find a property in the location you like and this is where you want to live, do it. Find the best company that will give you in writing the deal you are looking for. Set the rate and get them to agree in writing without any hidden costs to the agreement. This will probably mean you need to work with the big boys for the loan but there are good deals out there...

Thanks Johnè
1 vote
Michael Robe…, Agent, San Ramon, CA
Thu Feb 28, 2008
Tom, A rate contingency is something unusual. If your offer is made on a CAR form you could limit the interest rate in the financing terms to one you are agreeable to. Most listing agents will find this is a handcuff however, an offer IS an offer and considering all the terms of your offer will need to be considered more seriously. In other words...strengthening your position through contingecy time periods, down payment, closing dates etc...may allow for some more favorable debate. Good Luck. BTW...Different lenders will quote different rate so, you may very well find a lender who has better rates.

1 vote
Jeff Holloway, Agent, Sebastian, FL
Tue Jan 29, 2013
There is a clause in the purchase contract that specifies the maximum rate you would accept. The rest is up to your comfort level. Please be aware that some of the advertised rates are TEASER rates done by lead generation companies so they can get your info then sell it to mortgage lenders... then you get the real story of rates... nothing like a bait and switch!
0 votes
Gregorio Den…, , San Diego, CA
Wed Apr 27, 2011
"I have checked our rate matrix and I don't see a 1% shift on ANY loan program including Jumbos in the past two weeks."

That's because this thread is 3 years old.
0 votes
, ,
Wed Apr 27, 2011
Hello Tom,

I have checked our rate matrix and I don't see a 1% shift on ANY loan program including Jumbos in the past two weeks. Yes there was a move but not that drastic. When I pre-qualify a borrower, I try prepare them for unexpected movements in the market, and explain what factors affect the rates. But honestly I have not seen a 1% move in any direction in quite awhile. Maybe the quotes were all smoke and mirrors, like most internet loan companies are, you might consider getting a another opinion for loan. Please let me know if I can be of assistance.

Best of Luck!
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0 votes
Charlotte Mc…, Agent, Riverside, CA
Wed Apr 27, 2011
Tom, when you find the right home, in the right location at the right price, that is when you should start worrying about interest rates. It is good that you are aware of the fluctuation in the rates, but don't let it keep you from purchasing the home of your dreams. If you are uncomfortable going with an interest rate above a certain point, you can write that into the purchase contract. This is a common practice, in fact, in my office the contract is not considered complete without this information being provided. It is an important piece of information that should be provided to the seller so they know what your limits are.

Once you've found your home and have opened escrow, then you will be in a position to start looking at the rates and get ready to lock in. As Corey said, a lock on a rate does not last forever and is non-transferable. There is usually a limit as to the number of days you'll have to close escrow and still keep your locked-in rate.

When you write an offer, your Realtor should be able to give you an estimate as to what your costs on the real estate side of the transaction should be. At the same time, your lender should be able to give you a "good faith estimate" that will let you know an estimate as to what your costs will be on the loan side.

Good luck with your home search! Give the Ransom-McKenzie Team a call if you're looking for someone to work with in Riverside!

Charlotte McKenzie
0 votes
James Reusing, , Baltimore, MD
Tue Apr 22, 2008
hi tom, the rates have been pretty crazy lately. most lenders have not increased their coonforming loan limits yets but i know of a few who have increased their limits up to 729 in some areas for FHA loans. if you want me to quote you a rate just send me an e-mail to and i'll give you a response within about 20 minutes. by the way what rates have people been giving you ?
0 votes
John Gonnello, Agent, Palm Desert, CA
Fri Apr 4, 2008
You shoud get pre-qualified & lock in a rate as soon as possible.. The conforming loan limits have risen & you may be able to get what was a Jumbo loan at conforming prices..
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