Mortgage rates continue to set new record lows, leaving many home buyers and re-financers wondering how low rates can go and how to capture the best rates now.
- Many economists are forecasting that mortgage rates will rise again later this year as the American economy gradually improves and as more global investors turn to the U.S. as a safe haven for money.
- The average rate on a 30-year fixed-rate mortgage averaged 3.71 percent the week of June 14.
The rate had averaged 3.9 percent three months earlier and 4.5 percent a year earlier.
- According to one economist, rates could possibly fall further, perhaps as much as a quarter of a percentage point, but it is more likely that they would start a “slow drift” upward.
- Those planning to refinance or buy a home in the next two or three months might want to consider locking in a mortgage rate now.
- Borrowers with rate locks, with a built-in deadline, often receive priority treatment from lenders, because the borrower is telling the lender that he or she is serious about closing soon.
- Lock-in costs and policies vary widely, and are based partly on the time frame the borrower wants covered. Most borrowers will need a 60- to 90-day lock.
- If interest rates continue to fall during the lock period, borrowers can ask the lender to rewrite the rate lock at an additional cost, or obtain a “float-down” provision in the original agreement. A lock with a float-down agreement allows the borrower to change the rate, often only once, before closing on the mortgage. This option is generally more expensive than a standard lock.
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