Have you ever wondered why everyone has advice regarding mortgage rates?
Many consumers depend on the media or word of mouth to determine if it’s the right time to purchase or refinance, and what rate to expect. While this may seem like the easiest way to gain information, it is the least reliable.
Mortgage rates continue to be extremely volatile and information becomes outdated very quickly. As a consumer, it’s important to understand that mortgage rates change with the movement in the bond market, specifically the value of mortgage-backed securities. These changes happen daily and sometimes multiple times a day.
Consumers need to know the difference between a rate quote and a rate-lock commitment. The quote is not a guaranteed rate until it is locked. The rate lock is tied to the property address, so when shopping for a home, understand that any rate quotes you’ve obtained while comparison shopping cannot be locked in. This gives lenders the ability to quote a low interest rate to obtain your business, knowing they do not have to honor the rate. Additional considerations must be taken into account when building a new home. With three to six months to wait for the home to be completed, a lot can happen to rates. Many times, an extended lock-in period is an option, however a buyer should be prepared for payments at 1 percent above the current market rate to adjust for market fluctuations on the budget.
So, why can’t a lender simply quote a rate?
Click here for the full story…
DALLAS NEWS
June 28, 2009
