| Mortgage rates can fluctuate rapidly. With these | | | | remain artificially low, even as inflation rates |
| unexpected changes, it can be hard to know | | | | increase. |
| exactly when to lock in a rate. Could you have | | | | Finally, look at what large, national lenders are |
| saved money if you waited one more month? Or | | | | doing. Although there is no reason to expect all |
| did you stall too long and miss a window of | | | | lenders to follow along with what these large |
| opportunity? Wouldn’t it be easier if there | | | | lenders do, they often do. The business section of |
| were a concrete way to predict mortgage rates? | | | | your local newspaper will probably tell you |
| No one can predict mortgage rates precisely, but | | | | everything you need to know about what lenders |
| if you pay attention to a variety of factors, you | | | | are doing across the nations. Depending on where |
| may begin to notice a trend. Unfortunately, even | | | | you live and the economic climate, you may see |
| keeping an eye on the trends in mortgage rates | | | | similar results within days or weeks. While the |
| will not tell you exactly when it is the best time to | | | | mortgage rates may not be the same, the trend |
| lock in a rate. | | | | will be. |
| While it may be impossible to guarantee that you | | | | While following these basic rules will give you an |
| are locking in the lowest available rate, you can | | | | edge over less informed consumers, there are |
| get a good interest rate by paying attention to | | | | other factors that will affect your personal |
| the market and knowing what to look for. | | | | mortgage rate. Lenders look at individual |
| In the past, it was much simpler to predict | | | | borrowers when determining what rate they |
| mortgage rates. They would typically follow the | | | | offer to a customer. A person seeking a |
| interest rates of corporate bonds, but lag behind | | | | mortgage that has exemplary credit, a hefty |
| by anywhere from six months to a year. And | | | | amount of money to pay for a down payment |
| while this would not make it possible to determine | | | | and some extra cash to pay on points will have a |
| the exact mortgage rate, it would provide some | | | | lower mortgage rate than someone who has |
| insight into whether mortgage rates were trending | | | | some blemishes on their credit, little money for |
| up or down. | | | | their down payment and not enough extra |
| This method was very effective when a bank or | | | | money to pay any points. |
| credit union made a loan and held that loan for the | | | | It is also important to understand the difference |
| duration of the term. Today, that is not how | | | | between a fixed rate mortgage and an adjustable |
| lending works. | | | | rate mortgage. Fixed rate mortgages are typically |
| A mortgage is originated at a local bank, but it is | | | | higher than adjustable rate mortgages. The |
| then bundled and sold. Because mortgages are | | | | adjustable rate mortgage may seem like a better |
| now considered investment vehicles, it is | | | | deal, but often the adjustable rate mortgage |
| important that the interest rates be competitive | | | | resets at a higher rate than the fixed rate |
| enough to attract attention from potential | | | | mortgage. |
| investors. The mortgages are pooled into an | | | | It is important not to waste too much time |
| investment group called mortgage backed | | | | worrying about mortgage rates. While we all want |
| securities. | | | | to save as much money as possible when buying |
| These securities have the same type of appeal | | | | a home, at some point you have to make the |
| as bonds, and the interest rate is typically | | | | commitment to invest the money and close on |
| comparable to that of a ten-year treasury bond. | | | | the loan. While it may seem like a mortgage is a |
| While the interest paid on a mortgage-backed | | | | lifetime commitment, in many cases it is possible |
| security is higher than that of a ten-year | | | | to refinance a mortgage. |
| Treasury, they will typically follow the path of the | | | | If mortgage rates drop, speak to your lender. |
| Treasury bond. For example, if interest rates for | | | | Some lenders will expect you to go through the |
| Treasury bonds drop, expect mortgage rates to | | | | entire lending process again when refinancing, while |
| drop as well. | | | | others will allow you to refinance without a new |
| Another consideration for predicting mortgage | | | | appraisal, deferring many of the closing costs. If |
| rates is the current rate of inflation. When inflation | | | | your lender seems unwilling to work with you on |
| gets higher, mortgage rates go up too. And | | | | this, shop around. You may find a better deal, or |
| conversely, low inflation rates usually mean lower | | | | you may find that your current lender is more |
| interest rates. There are, however, exceptions to | | | | willing to work with you in an effort to keep your |
| this rule. If the federal government is working to | | | | loan in house. |
| stimulate the economy, mortgage rates may | | | | |