The thing we talk about most with our clients is mortgage rates. Everyone is shopping around for the very best rate, and rightfully so considering the fact that the interest rate will have a huge impact on your monthly mortgage payment.
On the other hand, the biggest factor that influences the rate that you get is simply timing and/or luck. This is because rates are a function of the mortgage bond rates which are largely driven by upswings and downturns of the economy. This is what causes day-to-day changes in what rates are being offered to you.
Ultimately, the moment you decide to lock in your mortgage rate is a gamble (watch video above). The next day, week or month, rates could drop or increase depending on how the market changes. At the same time, there are some ways to help you navigate this process more effectively.
View Historical Rates
One of the best ways to know if the timing is right for locking-in your mortgage interest rate is simply seeing where the market has been over the last few months. Are we seeing declining, increasing or steady interest rates? Look back even a year or two and see what’s changed or what hasn’t. Like any other industry, mortgage interest rates are often a story of peaks and valleys. Looking back will help you look forward.
Watch the Day-to-Day Market
While most don’t have the time to sit and watch how the mortgage market is changing, those that do will have a better sense of where it’s going. At the same time, some geo-political activity or breaking news that scares investors could drive a shift in the market in almost real-time. Being aware of this is going to help you know what to do when it comes to your mortgage.
Understand What Influences Rates
Overall, mortgage interest rates are a function of the economy. When things are good, the investors of mortgage bonds seek higher yields which forces lenders to increase their mortgage rates. When things are bad, interest rates often decrease. It’s really a story of supply and demand that requires an understanding of the social, financial, political and legislative factors that may impact interest rates.
Talk to an Expert
The best piece of advice for anyone looking to buy a home, is to talk to a mortgage expert. These are the folks that are keeping an eye on the market and have insights that will help you make the most informed decision possible. You could try and analyze the market yourself, or work with a partner with years of experience that can guide you.
If you’ve got questions on rates and want to know if now’s the time to lock in your mortgage rate, contact us today.