Minneapolis, MN: Headlines are screaming Average mortgage rates dropped. Wow, super cool. Especially if you are actively in the home purchase or refinance market. Unfortunately, just like so many other things, the devil is in the details.
From June 29, 2018
We live in a Twitter 140 character world, and quick 30-second sound bites. The above real item was in my local newspaper stating "average mortgage rates drops" catches your attention. But did you really read it? Probably not, and this is the problem.
FREDDIE MAC WEEKLY MORTGAGE RATE SURVEY
The mortgage giant Freddie Mac puts out a survey once a week. This survey is picked up by all the big TV, radio, internet, and newspapers, and is generally reported every Friday.
For simplisity, understand that the survey is essentially an average of the PREVIOUS WEEKS activity. Therefore this report is an excellent source for following the long-term average rate and possible interest rate trends over time, but is a horrible source for what most people need - What is their rate right now.
Mortgage interest rates move up and down. Sometimes multiple times per day. Knowing what the average rate for all people last week doesn't mean anything today. Plus, reviewing the above article again, the average was down just .02%. That is meaningless, especially as mortgage lenders only quote in 1/8th
Without fail, any week where the survey comes out showing a lower rate, I am guarantee to take phone calls, or hear comments from clients wanting to lock the new lower rates. But is it really lower today, has it jumped up in the last few days - or heck, even the last few hours?
Read my related article about "Thinking of breaking a rate lock agreement?"
THE ONLY REAL QUOTE THAT MATTERS
Not only do rates move, but rates vary based on loan programs, credit scores, down payment, and even your choice of how you want to pay for some or all of your closing costs.
Another element is are you actually locking the interest rate today? If not, it doesn't really matter much what someone quotes you.
TIP: Some slimy lenders purposfully quote you low right now, knowing full well you are not locking a rate today in order to appear to have the best rate and to get you to use them. Later on, when you are already deep into the process with them, and you are ready to lock rates, they simply quote you the real rate of the day, stating "rates move."
The ONLY mortgage interest rate quote that matters is if you are locking it, and if it is based on a full and complete review of your application, along with a dicussion of programs, and your interest rate/closing cost option desires.
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Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Mortgages Unlimited. He was named the 2014 Minnesota Loan Officer of the Year, and Top 300 Loan Officers in the Nation for 2010, 2015, 2016, and 2018. To finance with Mortgages Unlimited, your local preferred mortgage lender for Minnesota, Wisconsin, and South Dakota, simply call (651) 552-3681, or APPLY ONLINE. NMLS 274132. Equal Hosuing Lender.