Advice on Locking Interest Rates

snow Well it is the beginning of a new year and it appears that things are improving for our country’s economy.  Building is increasing and more people are finding jobs.

Interest rates have creeped up a bit, however they are still in the 4’s and some high loan to value loans without mortgage insurance are in the 5’s.  These are still amazing rates.  Other good news is the Senate confirmation of current Fed Vice Chair Janet Yellen to the position of Fed Chairman when Ben Bernanke’s term ends at the end of this month.  She is not only the first female to ever hold this position, but more importantly, she is thought to be a “bond friendly” replacement to current Chairman Bernanke.  The general concensus is she would rather take a slower approach to easing the Fed’s stimulus programs, including the Fed’s participation in the bond market.

This should help keep mortgage rates low.

If you are one of those many people that may be considering obtaining a mortgage as part of your 2014 punch list than you will probably be interested in what interest rate might be available for you.  Locking in an interest rate is usually the most stressful aspect of obtaining a mortgage aside from getting approved.

Here are some guidelines I recommend you follow:

  1.  No one knows exactly what rates will do on any given day or moment.  If they did they would be rich.  It’s an educated guess.  Anything  happening at any moment in the world affects the markets including mortgage rates.
  2.  Listen to your mortgage professional but don’t think they have a crystal ball of when you should lock your rate in.  They can only advice you with what they see is going on in the market place.
  3. Rates can change several times in a day.  That is not the norm, but it does happen in a volatile market.
  4. Deciding when to lock in a rate is just like gambling.  There is always a risk if you don’t lock on a certain day, rates may be up the next day or even that afternoon.  If you aren’t a gambling type person than lock in at application or soon after that if you are comfortable with what rate is being presented to you.
  5. You may need to lock in at application if your qualifying ratios are on the edge and if rates go up you won’t qualify.  Everyone’s situation is unique to them so listen to your mortgage professional on what is going on in the market and also go with what is right for you and your situation.
  6. Do not get caught up in .25% either way.  It does not make that much difference in your payment over all.

Bottom line!!!!  If you see a rate you are fairly happy with lock it in.  Yes after you lock in they may go down the next day or week, however, it is much worse when you didn’t lock in and they go up.  It may be the difference of you qualifying or not.

Last item is make sure you are working with a mortgage professional that has been in the business for a substantial period of time and that they are a good communicator.  They should be keeping in touch with you and what is going on with your loan and in the markets, especially if you are not locked in and are floating.

Questions regarding mortgages or interest rates can be directed to:

Adriane LaSalle

STEARNS LENDING

801-726-9442

alasalle@q.com

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