If there is one question that I get asked the most, it is "Sherri, how low will mortgage rates go?"  Or another version, "Will interest rates go down further?"

Let me start by saying, THAT is the million dollar question.  In the last 3 weeks, I have seen 30 year fixed rates as low as 4.375%, only to jump up to 5.375%.  What a wild, wild roller coaster we are on!

I subscribe to many rate and market commentaries, alerts, updates and news.  I have been in this industry for nearly a decade.  And the Rate Game is the most difficult THING to put my thumb on these days.  Nothing makes sense.  Statistical data has been blown-out-of-the-water.  Experts predict down and then they go up. 

There seems to be a lot of buzz waiting for the government to bring the interest rates down to 4.5%.  Well, we've been there and lower.  Economic data can be major market movers, as we have witnessed with the change in mortgage interest rates several times per day.  Some experts predict that rates will continue to fall and others believe our Treasury is going to BUST and rates will sky rocket.  What gives?

If that isn't enough, let's take this a little further...inside the workings of the mortgage industry itself.  Rates are low...they were REALLY low 2 weeks ago.  But now we are seeing some crazy things going on.  Fannie Mae and Freddie Mac just announced more LLPA's (loan level pricing adjustments).  These are all the "adjustments" that get layered on top of the rate for certain loan scenarios.  For example:

• Want to do a cash out refinance?  Be prepared for an LLPA.
• Have a credit score under 740?  Could mean another LLPA.
• Buying an investment property?  HUGE LLPA!
• Buying or refinancing with a 1st and 2nd mortgage?  Yep!  You're getting it now...another LLPA.

So let's say 30 year fixed rates are at 4.5%.  You want to refinance.  You have a 699 mid credit score, you need to take a little cash out to pay off a bill and your loan-to-value ratio is 80%.  Think you will get a 4.5% rate?  Not even close...Unless you want to pay points to cover all those little LLPA's.

To make things even a little more interesting, there is now talk of major lenders beginning to absorb their costs of lost interest rate locks by charging fees.  These fees will be "absorbed" in their interest rates, meaning an inflated, higher rate or charging the fee outright.  See my blog, What?  Mortgage Rates Go Up When They Are Going Down? for more information on this.

If I can offer my 2 cents of advice on the Rate Game, it would be this:

1. If you feel inclined to shop different lenders, do it ahead of time, find a lender or loan officer you trust and stick with that person.  Yes, that means conversation, getting a GFE and doing your homework up front.  If not, you may end up losing...I have seen it happen on many occasion.  Rates can change several times a day.  Don't chase 3 or 4 lenders.  By the time they all get back to you, rates may have gone up.
2. With that research, make sure you find a loan officer who is current on economic news and has the technology to inform you of possible upcoming rate changes before they happen.
3. Be prepared to lock at a moment's notice.  That means, giving your loan officer every conceivable way to get a hold of you.  Remember what I said earlier...we are on a roller coaster ride and the ride just keeps getting wilder!
4. If you are refinancing, know what the value of your home is, or at least an accurate estimate.  Remember LLPA's?  They can hurt when you find out you really have a loan-to-value ratio of 80% and not 50% that you wished for.  Also, know what you want to do with your refinance.  Is it just rate-and-term?  Are you taking cash out?  What do your credit scores look like?  When you choose your loan officer, have this discussion.  Know what your certain set of circumstances are and how those may affect the interest rate.  It will save your loan officer from having to deliver the bad news that you really can't get that wonderful rate unless you pay points and it will save you from frustration.
5. This one may sound bold, but here it is, anyway...Don't get too greedy.  You may miss the boat all together.  If you are waiting for rates to go down to 4.25% without closing costs, you most likely will never move forward.  Rates are at a historical low.  If it feels right and the payment fits, LOCK !