The following article was contributed by Kevin Ungar, a mortgage broker in New York. The process of buying a home can be an arduous one. The homebuyer’s mind gets cluttered with so many things–contracts, W-2s, pay stubs, title insurance, closing costs, movers, etc.. Today, I want to talk to you about what many consider to be the most important part of the homebuying process: the interest rate.
This idea of "lock today.if rates drop well "relock" you at the lower rate" was perpetuated in the new home builder boom days when it was clear the direction of the Fed and mortgage rates was lower.to sucker folks into contracting on homes that might take 12 months to deliver.
Consider these illustrations of what a half-percentage-point cut in rate can mean. They were provided to me by Mike Fratantoni, chief economist for the Mortgage. point rate drop would save you.
Some companies have a policy that if their posted rates drop a by a certain percent by the time your mortgage loan closes, they will give you a rate somewhere in between the current rate and your locked-in rate. So if you have already gotten a rate lock but interest rates have fallen significantly, making your locked rate seem unreasonably high,
Mortgage Rates Remain at Highest Levels in Seven Years Despite Stock Market Commotion – Research Long-term U.S. mortgage rates edged slightly higher this week amid continued anxiety in financial markets as interest rates rise. home borrowing rates remain at their highest levels in more than seven years, with the key 30-year rate approaching 5 percent. Mortgage buyer Freddie Mac says the rate on 30-year, fixed-rate mortgages ticked up to an average 4.86 percent this week from 4.85 percent last week. A year ago, it stood at 3.94 percent.
· A drop in the Fed Rate simulates the Stock Market, investors pull out of the Bond market which often causes longer term interest rates go up. What Mortgage Brokers use as a rule of thumb is when the stock market surges, it drags Mortgage Rates up.
When interest rates rise, a mortgage REIT’s holdings lose value, and the share price tends to drop. On the flip side, REITs can also lose value when interest rates fall and more mortgages are prepaid,