Mortgage Rate Strategy for Home Buyers

Mortgage rates moved lower again last week, back to levels not seen since May 2013.  It’s interesting to consider that the Federal Reserve’s asset purchases have now been fully phased and that a rate hike is a much more immediate threat, yet rates are back to where they were before markets really began adjusting for all that “stuff.”  That’s the power of global economic turmoil and a troubling lack of inflation for core economies.

The specific result for home buyers is the greatly increased prevalence of 3.5% as a conforming 30-year fixed quote for top-tier borrowers.  3.625% is “ubiquitously available,” according to Mortgage News Daily. Keep in mind that these rates refer to the most qualified borrowers with 25% equity or more, and high credit scores among other things. The 3.5% rate, in other words, is a baseline and your actual rate will depend on your situation. The important part is the day-over-day change and the relationship to recent levels.  No matter what you were quoted in the past few weeks, if your scenario is the same, today’s rates are better.

In terms of how to approach this rate environment, the key is to recognize that the current rate scenario CAN end any time.  One common strategy for those that want to keep floating in the hopes of further gains would be to set a limit at slightly higher rates than today’s quote and keep floating until that limit is reached.  For instance, if you’re being quoted 3.5% today, you could plan to lock if your rate rose to 3.625%.  It’s the same concept as a “stop-loss” employed by investors.  Whatever you do, be sure to coordinate on your strategy with your mortgage originator.

Of course, you need to be under contract to purchase a home to lock your mortgage rate. So, grab the brass ring and get in touch with The Elite Team at RE/MAX Peak Properties. We’re eager to help you buy your Flagstaff home.

More technical stuff: Mortgage Rates Shoot Past Recent Lows; 3.5% Getting More Prevalent

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