Understanding why rates go up and down will help us help you lock in the best rate at the right time.
Just about everyone understands that mortgage rates fluctuate but few people understand why or more importantly, how to use market fluctuations to their advantage.
Walter Bianchi, founder of Seaside Home Loans and a licensed mortgage broker, says he encourages home buyers to consult with a licensed mortgage broker as early as possible.
“The way to find the best mortgage is to ask your broker to analyze your situation and assist in locking in the right rate and the right loan,” Bianchi says.
Factors such as mortgage insurance influence the overall cost of a loan, not just rates, Bianchi says.
“Borrowers need to watch more than market trends and a good broker will help you assess all factors,” Bianchi says.
“The more you know about how rates work, the better you can negotiate low rates from your preferred mortgage lender,” according to Dan Green of The Mortgage Reports.
“In general, as the price of a mortgage-backed bond changes, so will today’s rates,” Green says. “When Wall Street’s demand for mortgage bonds increases, all things equal, mortgage bond prices rise which causes mortgage rates to fall.”
Mortgage rates move in the opposite direction from mortgage bond prices.
“During periods of economic or political uncertainty, then, mortgage bonds tend to be in high demand, which leads mortgage interest rates lower. This trading pattern is known as a “flight-to-quality” and it’s a fairly common one.”
If you don’t want to take the risk of playing mortgage markets specialist, your best bet is to work with a professional mortgage broker to help identify your needs and the best timing to lock in the right rate.
Still, it doesn’t hurt to understand the basics of mortgage rate fluctuations. As Green says, “When you understand the forces controlling the current mortgage rates, you can be a better shopper.”
Green correctly explains that rate quotes almost always include the current rate plus closing costs. Because closing costs can vary greatly from lender to lender, this is a critical distinction.
“There are two ways, then, to shop for mortgage interest rates. 1. You can shop for a particular mortgage rate that you want. 2. You can shop for a particular closing cost that you want,” Green says.
When you track one of the two loan variables affecting competition, it becomes easier to know the best deal when you find it.
If you’d like help finding and locking in the best rate for your new mortgage or refinance, give Walter a call at 904.894.6037 or send him an email. He is ready to help you find the best mortgage possible.