What's up with Mortgage Rates?

Mortgage and Lending with Right Start Mortgage (NMLS #35960) NMLS #19622

I read an article yesterday on MarketWatch.Com that basically summed up some of what I've been telling my customers of late. Rates were very low -- below 5% for a 30 year fixed rate mortgage -- a few weeks ago. People wouldn't commit to 4.75% because they wanted 4.5%! Then, some good (albeit bogus in my opinion) news about the economy was released and interest rates spiked. Those customers who could have gotten 4.75% were now getting 5.75% or 6%. There's a lesson there somewhere!

Well, rates have been bouncing around the last week or so. We're at 5.5% today for a 30 year fixed. According to the article, experts are predicting that rates will drop from where they are today and they actually predict that we could see rates drop below 5% again. This is obviously no guarantee but it makes sense. In my opinion, the economy is still in a shambles and there is really no inflationary pressure to push rates higher. It's important for rates to stay low to help jump start the economy.

Anyway, the article went on to say that you customers -- home buyers and people looking to refinance -- need to be ready for when the rates do begin to fall. It takes much longer than it used to to close on a mortgage. Banks are shortstaffed (because of lay-offs) and the ones still standing are actually overwhelmed with files. And, the banks won't even look at your file unless it's complete. You need to do the following:

  • Choose your mortgage broker/banker
  • Complete the mortgage application and have your credit pulled to ensure your credit qualifies you
  • Give your broker/banker all necessary income and asset documentation
  • Have the appraisal done -- home values are down and the appraisal is probably the number 1 killer of mortgages in today's market (particularly refinances and reverse mortgages but also purchases in situations where the seller needs a certain amount of money to walk away whole)

If you aren't prepared, you may miss the next interest rate reduction.