Mortgage Blog

There is a book on Amazon: right and wrong thinking. I did not have the time to read this book, and I do not know what this book is talking about. BUt in the daily life, sometimes our way of thinking was not correct(in some way).

In the mortgage business, we will see the rate going up and down. And it is very normal to see the rate fluctuate for 0.125%, even during one day. I have some borrowers(less than 1%) asked me to switch lenders when they see rate lower. And I explained the logic behind that was not correct.

If a person locked the rate of 3.625% for 30 yr fixed. That's the rate he will get. If the rate goes lower to 3.5%, then he might not be happy since he did not get the lower rate. And when the rate goes higher, he might be happier since he thought he got the lowest rate. But when you get the rate 3.625%, the rate stayed the same, but the lower rates trend will suggest the low lower rates in the future, and he may have future chance of refinance again. And if the rate goes higher, though you got the "lowest" rate, but you will not get any lower rates any more. Why the people felt differently.

Same for the stock market, when the market is up, everyone is happier because we have more paper money. But if you are a long term investor, you would be happy to see the correction/crashes so that you can pick up "cheap" good stocks. So you should be happy when you see the stock market is down. Is not it the right way of thinking?