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Tough mortgage question - who can answer this one?

What's today's mortgage rate? That, my friend, is the million dollar question.

Ok, so I'm buying a house: the "cat is officially out of the bag." I tried to keep it low-key because i wanted to surprise my in-laws. I wanted to wait for them to visit me and find renters in my current home! I would have LOVED to see that!

So, I'll write about this homebuying experience later. For now...what's today's mortgage rate?

I locked my loan for 6.375% because I was told that rates went up today on the 30 year fixed. However, later this evening I was told by another lender that rates went down!

So what gives? Like any resourceful, diligent young real estate agent I decided to Google this. I Googled "daily mortgage rate history" and "mortgage rates" to get to the bottom of this. I found three articles:

This one says that rates are unchanged - http://www.reuters.com/article/gc03/idUSN1043138120080710

This one says that rates are higher - http://money.cnn.com/2008/07/10/real_estate/mortgage_rates/?postversion=2008071013

This one says that rates are lower - http://www.foxbusiness.com/story/markets/industries/finance/bankrate-mortgage-rates-fall-weeks-row/

Can you figure this out? First one to give me an answer gets Starbucks on me...

Posted by Edward W. Lui - Georgetown Texas Real Estate on 07/15/2008 11:17 PM

Comments (10)

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10 Comments on Tough mortgage question - who can answer this one?

JUL

2008

STICK WITH YOUR LOCK IN- CLOSE AS QUICK AS YOU CAN.

KEEP ON BLOGGING

BILL

I would say stick with what you got, I think it will be harder and harder to get a loan...

Edward,

I do not claim to be an expert, but the PPI was higher than expected and the CPI comes out tomorrow. The Fed is talking inflation.

I locked several loans this morning. Pricing went up this afternoon, but to verify if you received a good rate, check with some other local lenders.

Congratulations.

First and foremost, the rates are between 2 and 10. (lol, sorry had to throw that in there) It depends on your personal situation. Where you have your rate locked in now is great. The real question is, are you satisfied with the current rate your locking in at. You can always keep hunting new rates, (daily and hourly). Think about it like buying parts for a computer: You can always buy the parts you need today, only to find out the price has gone down tomorrow for the exact same price, but if you keep waiting for the lowest price 2 things will happen. 1, you'll never buy the part because the price will continue to go down; 2 new technology will come out and you will need that part instead. Same with rates, new rates will always be issues depending on what's happening at that moment, but can fluxuate (up and down). Bottom line is, you have a good rate, and if your comfortable with it, don't let it stress you out. Congrats on purchasing your new home!!!

Gene

Realistic Endeavors

JUL

2008

The risk of higher rates is greater than than the possibility of better rates.

While rates do move daily, it isn't always enough to 'click over' to the next best rate which is offered in 1/8th (.125%) increments. Think digital clock.... the minutes click over when 60 seconds pass.... but time actually moved without a movement in the minute counter. (did that make sense?) So rates may have improved or worsened without the consumer seing a change.

I like bankrate.com because it's easy - just numbers which is all that really matters. They even have a link to see national average vs state averages.

JUL

2008

I would agree that Bankrate.com will typically provide the closest PAR rate. So, here it is... the concept no LOs or Lenders want you to hear... ready?

Rates are driven from the bond market. As those go up, rates come down. As the bond market drops, rates go up. Rates are priced in the morning based on trends, around 10:30 am eastern. Depending on how the market continues throughout the day, rates may get adjusted mid day (up or down).

How do they adjust? Well, as I mentioned there is a PAR rate. This is the rate, if you do a basic Purchase or Rate and Term refinance, over 720 FICO, and Low LTV. Let's say that the PAR rate is 6% today (it's not, but let's say it is). You could get a 6% loan, but you would pay all lender fees plus your mortgage broker fees. Why? Well, if the par rate is 6% and that is the rate we give you, that means the lender is not paying the broker a YSP (yield spread premium). If I wanted to make some money from the lender, I may have to charge you 6.25% which means I would get my fees from you PLUS get about 1% from the lender.

Now let's say I want to show you less fees. I would lower the lenders fees and/or brokers fees, and charge you 6.375% for the rate. Why? Because the lender will pay me a higher YSP on the back to pay for the fees and still make money. Thus making it appear to you that your getting the best deal. That is not to say you aren't getting a better deal. You have to really run the math and do a comparison. If you planned on selling the home or refinancing in 5 years, you best bet is to sae on the fees and take the higher rate.

Keep in mind, that this is based on certain LTVs, 720 FICO, and Full Doc. If your FICO is lower, then the lender hits you with additional fees to the YSP (which ultimately means a higher rate for you).

Another thing to keep in mind is what site you are getting your information. Sometimes you can go to a site that is only updated once a week. So it may show rates went down, when in fact rates went up (or the other way around).

Bottom line... your rate of 6.375% is probably pretty accurate. I would only second guess if they rate they give you is much higher. LOCK IN the rate to ensure it does not adjust further. Rates are expected to continue to go up. I have already received a rate increase today by another 1/8th of a percent. Good luck and Congrats on the purchase.

I know rates change daily. It all depends on who you talk to and what time of day it is. Different lenders offer different rates.

JUL

2008

Gene - thanks for the great tip:) I'll be sure to use the "2 - 10" with my clients next time! hahaha.

Joe - great run down. Very educationl, thanks! That mid-day change could explain the different reporting by different news agency's all on the same day.

We had an email come out and state that 12:30 pm rates would be increasing. Seems to be happening more and more. It's out of OUR hands.

Bottom line are you happy with your MORTGAGE PAYMENT?

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