June 10th, 2015 7:23 AM by Jackie A. Graves, President
For some homebuyers, the 4.00 percent 30-year fixed mortgage
rate is a line in the sand they have no intention of crossing. As of June 2,
2015, some lenders are already charging 4.125 percent for a benchmark
conventional 30-year fixed rate mortgage, according to Mortgage News Daily's
Chief Operating Officer Matthew Graham.
Graham says that the higher rates are most readily explained by
the domestic market's relationship with European markets where economic data
and headlines concerning a potential Greek debt deal caused European rates to
"The more it looks like Greece will get some sort of
'deal," says Graham, "the higher rates go in the stable countries,
and it's those countries that have the most direct effect on US rates."
So where does that leave borrowers like you who are shopping for
loans? It may seem counterintuitive, but you might consider locking in your
rate before interest rates go any higher.
Locking a rate simply means that the lender will not raise or
lower the rate during the lock period, so you're sort of betting that you'll
save money. You can lock in a rate anytime once you've applied for a loan, but
you have to be preapproved by the lender before you can lock in your rate.
According to Bankrate.com, most lenders offer a loan lock period of 30, 45, 60 or 90
days. The longer the lock, the more you'll pay for the loan, so most people
wait until they've put a home under contract before they lock their rate with
Most people would assume that the time to lock in a rate is when
rates go lower, but in a market that is volatile, it's better to be safe than
sorry. You won't know which way rates are really going to go.
Graham explains that's because some people believe we're in the
midst of a race among world central banks to devalue currencies and lower
interest rates. Others believe that the global economy is turning a corner and
rates will grind higher.
That leaves you, the borrower, caught in the middle of
fluctuating markets. The best thing you can do is talk to your lender and
develop a strategy for your loan. A good lender will watch the market
carefully, and try to get you the best rate possible.
Written by Blanche Evans – To view the original article click here