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How to Win the Rate-Change Game

February 3rd, 2015 3:12 AM by Jackie A. Graves, President

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Timing is everything in life—and it’s certainly key in getting a good home loan. A low-interest rate can save you a bundle over the life of a 30-year loan.

Because interest rates fluctuate daily, it’s difficult to know exactly when to pull the trigger. There are things you can do to improve your chance of success.

Interest rate cycles

Interest rates run in cycles. Your goal is to take out your loan when the cycle has reached bottom and rates are at their lowest. Comparing prices among lenders is essential. Government-sponsored mortgage giant Freddie Mac conducts and posts weekly surveys to track the national mortgage market.

You can also find mortgage rates in communities throughout the country on a variety of websites, including realtor.com®.

Economic trends

When playing the rate-change game, it’s very important to be aware of economic trends. Consumer confidence, reports on employment, fluctuations in home sales, and other factors can influence interest rates. If changing economic trends reflect strength and low unemployment, interest rates may increase.

Several government departments and think tanks such as the U.S. Department of Labor and the Pew Research Center regularly review and report on consumer confidence, employment levels, and other economic trends. Check these publications frequently before you apply for a loan.

Supply and demand

Mortgage rates are also affected by the laws of supply and demand. As demand increases for mortgages, interest rates rise. When the economy is slow and unemployment levels increase, interest rates tend to fall. Bad news for the economy can be good news for consumers shopping for low-interest rates.

Keeping up with financially geared magazines and publications can help you determine when the economy might be ripe for good loan deals. You can also get important real estate and financial news through the news portal at realtor.com.

Locking it in

When you’ve shopped around and found the right interest rate, it’s time to lock it in to make sure it doesn’t go up while you’re waiting to close on your purchase. Your lender may charge a fee to lock in your rate, so consider that when comparing loan costs. Make sure the lock lasts long enough for the loan to close and get it in writing.

When you shop for loans, be sure to consider closing costs along with interest rates. A low rate with high closing costs will cost you more in the long run. It’s also useful to compare annual percentage rates, which represent the total cost of credit on a yearly basis.

And be sure to compare only loans of the same type and terms.

By: Angela Colley | Updated from an earlier version by Emmet Pierce

To view the original article click here

Posted by Jackie A. Graves, President on February 3rd, 2015 3:12 AM

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