Mortgage Rates: Reprieve Gone. Opportunities Remain


After a brief but sizeable rebound on Friday, Mortgage Rates experienced an
equally sizeable rebound back higher, though we hope it will be equally

Markets suffered from a pronounced lack of activity today with numerous
participants out of commission due to Irene as well as some overseas markets on
Holiday.  All in all stocks rallied
significantly and interest rates rose. 

CURRENT MARKET*: The BestExecution 30-year fixed mortgage rate
has moved BACK UP to 4.25% and in some cases 4.375%. Several lenders are
willing to offer lower rates, but those quotes carry with them additional
closing costs.  On FHA/VA 30 year fixed BestExecution moved BACK UP
to 4.25%.  Deals can be structured with lower rates, but again, you’ll pay
more for those, so make sure you assess the time it takes to break-even on the
extra expense.  15 year fixed conventional loans are best priced at
3.625%. Five year ARMs are still best priced at 3.250%. ARMs seem to have
bottomed out. 

A note on the greater-than-normal variation in rate offerings between
lenders.  There is an increased amount of variety in what individual
lenders are now quoting as their BestExecution rates.  This is a
factor of price volatility in the secondary mortgage
 Unfortunately when volatility picks up in the secondary
mortgage market, the cost of doing business gets more expensive for lenders
(hedging costs go up). Those added costs are usually passed down to consumers
via extra margin in rate sheets.  Additionally, the recent rates rally
makes lenders busy enough that some control their inbound volume by raising
rates regardless of the secondary mortgage market in order to discourage new

GUIDANCE: Two things… First of all, locking in here still makes lots of sense for lots of scenarios considering our overall nearness to all-time lows.  The guidance from any of our recent posts holds true there.  That said, due to
the insane lack of market participation today, you may see a brief improvement
in rate sheets that could net the aggressive floater an extra eighth of a
percent in rate, and while there’s no guarantee we’ll see this, it’s the first
time in a long time that a short term float strategy seems to make any sort of
sense.  Friday remains high risk owing the the Employment Situation Report, so if you’re not locked up by Thursday, you’re at the whim of Friday’s jobs data.

Refi Roadmap: A Locked Rate Isn’t a Closed Loan
must read


*Best Execution is the most cost efficient combination of note
rate offered and points paid at closing. This note rate is determined based on
the time it takes to recover the points you paid at closing (discount) vs. the
monthly savings of permanently buying down your mortgage rate by
0.125%. When deciding on whether or not to pay points, the borrower must
have an idea of how long they intend to keep their mortgage. For more info, ask
you originator to explain the findings of their “breakeven analysis”
on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The Best Execution loan pricing
quotes shared above are generally seen as the more aggressive side of the
primary mortgage market. Loan originators will only be able to offer these
rates on conforming loan amounts to very well-qualified borrowers who have a
middle FICO score over 740 and enough equity in their home to qualify for a
refinance or a large enough savings to cover their down payment and closing
costs. If the terms of your loan trigger any risk-based loan level pricing
adjustments (LLPAs), your rate quote will be higher. If you do not fall into
the “perfect borrower” category, make sure you ask your loan
originator for an explanation of the characteristics that make your loan more
expensive.”No point” loan doesn’t mean “no cost” loan. The
best 30year fixed conventional/FHA/VA mortgage rates still include closing
costs such as: third party fees + title charges + transfer and recording. Don’t
forget the fiscal frisking that comes along with the underwriting process

CAUTION: MND guidance is speculative in nature. We don’t have a
crystal ball, we can’t predict the future, we can only share our outlook.
Making the following considerations extra important……………………

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough


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