Why have mortgage rates been low lately? And what are the determining factors for the rates?

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We are planning to refinance our house, and we want to get an idea on when to lock a rate and apply for a loan form the bank.

If a mortgage expert gave me an interest rate based on a good faith estimate, and that interest rate doesn’t match what I have heard (I have extra great credit scores), should I shop around? How can I determine current interest rates? Also, if I have signed initial paper work with a mortgage officer, but not closed on the loan (we are waiting on an appraisal), am I locked in with him, or can I still shop around?
yes, it is a refinance. thank you!

  1. Reply
    January 26, 2011 at 8:00 pm

    Rates have been lower because the market has been slower. Now (between Thanksgiving and Christmas) is always the best time of year to purchase or refinance. Rates are usually lower at this time of year.

  2. Reply
    January 26, 2011 at 8:18 pm

    Rates are controlled by the 10 yr treasury bond, and more specifically by MBSs, or mortgage-backed securities which are also traded publicly on the secondary market.

    A rule of thumb is that when bond prices drop, mortgage rates rise, and when bond prices rise, interest rates go down.

    There are many factors that come into play, including inflation. Because the Fed has kept rates steady, inflation worries have subsided, and interest rates stay down as inflation is perceived to slow as well.

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  3. Reply
    January 26, 2011 at 8:27 pm

    if it’s a refi, you have up until 3 days after closing. The best thing you can do in the mortgage industry is shop around or have someone shop around for you. Don’t settle, this decision could be with you for the next 30 years. Be informed and educated about the process. I know because I am a mortgage broker and I have seen people get into really bad situations, because they didn’t shop around.

  4. Reply
    January 26, 2011 at 9:09 pm

    The rate quoted on your initial Good Faith Estimate was the rate available at the pricing quoted on the date the estimate was prepared. Rates change every day, sometimes several times a day. All your mortgage officer and ask what today’s rate is for the saame program. Until you instruct your mortgage officer to lock in the rate you are floatin. It is your choice of when to lock.

    Rates will vary from lender to lender and day to day. The most challenging thing for the consumer to discern is whether or not they are comparing apples to apples when rate shopping. Remember, rate is only one component of what makes it the right loan for you. If you pay too much for it, it wasn’t a good deal. Peple who shop solely by rate are being short sighted.

    You can change lenders right up until the day the papers record but give your mortgage officer a chance to work with you and get the best structured loan for you.

    A Good Faith Estimate is just that, an estimate. It sounds to me like you need to communicate your concerns to your mortgage officer so that you can get enough information to make an informed decision.

  5. Reply
    January 26, 2011 at 9:19 pm

    A great resource would be http://www.bankrate.com . I have refinances through brokers on that site twice in the last six years and have been happy with the service. Even if you dont get your loan through them it a great resource to see what the most competitve rates are, this may keep your current guy honest.
    You can shop until you sign the mortgage, you may lose some of the fees you have paid.

  6. Reply
    January 26, 2011 at 9:20 pm

    You can always shop around. If you find a better rate simply demand that he give it to you. Check http://www.bankrate.com for the latest rates all across the US.

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