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Chutes and Ladders

April 18, 2010

So, I was playing Chutes and Ladders with my son the other day and it occurred to me that this analogy might help prospective buyers currently looking to buy a home in Chicago understand the mortgage rate market. So here goes. For those not familiar, Chutes and Ladders is a kid’s game where you simply try to get to the end of the game board by moving your game piece based on the spin of a wheel. The chutes and ladders referred to in the name are arrayed about the game board and, as you land on certain points, you either move ahead or fall back. As I bounced back and forth on the board, I realized that I am watching a colossal game of Chutes and Ladders everyday in the mortgage marketplace as rates swing back and forth based upon economic data.

Homebuyers move ahead by getting their documents to the lender and meeting their requirements for a loan approval and hoping for a good rate. Then bang, unemployment drops and consumer confidence rises. The buyer hits a chute on their rate game board and is now looking at a higher rate than originally expected, but they keep chugging along. Then boom, housing data shows weak sales and Greece nears default on their debt and rates plunge. The same buyer is now looking at lower rates. Eventually, they, like the players in the children’s game will happily reach the end and rejoice in their purchase, but throughout the journey they will face fluctuations. Like the chutes and ladders in the game, they are beyond any control and they can only react the best they can to make the most of the situation at any given time.

So to all those exasperated buyers, I say take a step back. When you have hit the point of near maddening frustration with the direction of the rates and when to lock, think in terms of the children’s game many of know and love. Remember that like the game, you have very little control over which way rates go and there is no foolproof way to predict what rates will be from day-to-day. By accepting this and by making the best decision that you can with the information that you do have, you will greatly reduce your angst and frustration. Be assured, that you will eventually reach the finish. So if you want to see what the interest rates are doing today or see how much home you can afford, just let me know, I’m happy to help!

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