by Billy Currano | July 18, 2012 9:00 am
If you have a mortgage, you should be on the phone calling for quotes to refinance. Treasuries, which play a big role in setting mortgage rates, hit new record lows this week, with the 10-year Treasury touching 1.44% and the 30-year at 2.52%. That’s mind-boggling when you consider that in 2005, you could get a money market account at 4.25%.
If you think it’s too soon after your last refinance, consider this: I just refinanced in April, and I’m calling for quotes again.
Getting back to rates, though. Why are Treasuries important? Widely quoted in the financial media as a gauge of the overall bond market, they’re also used to set many loan rates. One company told me it tacks on 1.25% to the Treasury rate to get its rate for FHA 30-year loans.
But while you can watch Treasuries to guess which way rates will be moving, that won’t necessarily give you a clear idea at a glance what the available rates are. I’ve found Wells Fargo‘s (NYSE:WFC) Today’s Rates page, which is updated several times a day, to be a pretty good indicator of what you can get at Wells (your actual rate will vary, but it’s close).
A good website to check for rates from multiple lenders is www.bankrate.com. Just be aware of the fine print you have to read to tell whether the quotes are really comparable to those on Wells Fargo’s page.
Finally, Mortgage News Daily is a great site for what’s going on with mortgages and what kinds of deals people are actually getting today (what it refers to as “best execution”).
There’s another variable behind the scenes, however, which lenders refer to as “pricing.” For you, it basically means that within the interest rate band available, the lender may have some wiggle room up or down to adjust the lender’s credit (money the lender gives you at closing to help pay your closing costs) it can offer you before the lender hits the next breakpoint and move to a different rate. So, even though you might get the same rate on two different days, on one of those days you might get a bigger or smaller lender’s credit — sometimes by a few thousand dollars.
Who should you call for quotes? I have personally worked with Wells Fargo twice. My loan officer there was by far the best I’ve dealt with. He used to have his own company, so he knew his stuff in and out, and while his workload made him hard to reach sometimes, he was totally transparent about everything he showed me. One nice advantage of a Wells Fargo mortgage is the company lets you count 10% of it toward the $25,000 minimum asset balance to qualify for free trading at Wells Fargo Brokerage if you have a “PMA” checking account.
My last refinance was with Pleasant Valley Home Mortgage. My contact there stayed on top of things and communicated frequently with me about the status of my loan application. You can check its license page to see which states it’s licensed in.
Currently, I’m getting quotes with GoodMortgage.com, a lender that a co-worker used not long ago. Since I haven’t closed a loan with it, I can’t speak from my own experience, but my co-worker was happy with hers (she refinanced with it twice, on two different properties). Good Mortgage’s licenses are listed here.
Be aware that there are basically three types of “lenders” you’re likely to run into. The first is a bank like Wells Fargo, which supplies the money for its loans itself and generally services them as well.
The second, which is the type Pleasant Valley and Good Mortgage are, calls itself a lender but acts more like a broker, in that it does supply the money for its loans, but immediately sells them off to another lender once the loan is closed. That’s nothing to be alarmed about. It only affects where you send your payments and the post-closing service you get. The lender will tell you about all of that in your application process.
The third, and the kind that I wouldn’t deal with, is a pure broker that simply shops around with different lenders for you. Brokers will charge you an up-front commission on the loan, which will end up being from a regular lender like Wells Fargo anyway, so basically you’re paying more fees to get the same thing you could have gotten by yourself.
And if you see Wells Fargo’s rate page showing a 30-year fixed FHA rate of 3.25%, I’d call as many lenders as you can immediately for quotes and lock in once you figure out which one has the best deal. It hasn’t happened yet, but if it does, it means rates are hitting a new record low, and you’re unlikely to get a better chance.
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