After mortgage rates hit record lows of 3.94% the week of October 3, rates are up .375% in the past two weeks. And while rates are still incredibly low, refinancers and home buyers in Knoxville are always looking for the lowest possible rate. The main reason rates rose is market optimism about Eurozone leaders acting to contain problems with troubled European member nations like Greece. Eurozone issues are also a big reason interest rates got so low in the first place.
Here is why: If one or more Eurozone nations defaulted on their debts, European and U.S. banks would both suffer and it could lead to market turmoil on the levels seen in 2008. Because of these concerns, global investors have sought safer bets like U.S. mortgage bonds. When bond prices rise on this buying it in turn makes rates fall. This volatility doesn’t look to be ending anytime soon as the Eurozone crisis continues to play out in the coming weeks and months. Rates trade in realtime and react to each and every little development. Because of constant developments and volatility, chances are good that rates will touch early-October lows again. However these lows come and go in minutes during specific trading intervals each trading day. This kind of volatility should drastically change the way consumers shop for a mortgage. Because of this market volatility rates move up and down so fast right now, that the rates you see in mainstream media headlines are long gone by the time you can do anything about it. So here’s how to shop for a mortgage in this new world.
SHOP FOR A KNOXVILLE MORTGAGE BROKER OR AGENT, DON’T SHOP RATES.
Knoxville home buyers shop for mortgages and they should. However, here is the point of this post: to get the best rate you should be shopping for the best Knoxville mortgage ADVISOR. If you’ve found them and done that, you will get the best rate. When loan shoppers focus only on a rate and get quoted by a good loan agent here is what happens: the loan agent quotes a rate only after they’ve looked through and verified the client’s entire financial profile and in the case of a refinance they have looked at their home’s value and condition—also known as “pre-approving” them. Oftentimes the buyer will either tire of the pre-approval process or be unhappy with the rate and go elsewhere. Those buyers will then go elsewhere for additional quotes from other sources, but usually come back to that good loan agent because the competing rate quote they received was revealed to be incorrect when the other lender actually completed the client’s profile analysis, or the home’s value/condition made the loan ineligible (all of which the good lender did prior to giving rate information). Mortgages are extremely competitive so rates and fees are generally the same with most (established, credible) lending firms. What is unique to different lenders or agents is the ability to: (1) property advise, (2) analyze borrower and property profiles, and (3) close smoothly and seamlessly. So when you are shopping for a loan, be sure to shop for a Knoxville lender and loan agent you feel can confidently perform on all three of those points. After choosing them, then work with that loan agent to pick a rate target you can’t or won’t go above, and give them a standing order to lock that rate when they see it. These guidelines are for refinancers. For homebuyers, you can’t lock a rate until you’re in contract to buy a home, but once you’re in contract, the same approach applies. There are two reasons for the pre-approval and rate targeting tactics discussed above: (1) A rate quote that flies through the air doesn’t mean anything. If a Knoxville loan agent doesn’t issue you written terms after obtaining a full profile on you and your home, then you haven’t received a quote that you can count on. (2) Rate lows are here and gone in minutes each trading day as mortgage bonds rise and fall on economic and technical trading signals. So if you don’t get pre-approved first, then set a rate target with a standing lock order, it’s nearly impossible to hit the lows AND close with no surprises. Your Knoxville loan agent also must be able to update you daily or weekly on the market outlook. If you’re not feeling that your agent has a grasp of the market, then keep shopping. A loan agent must have a strong read on what’s impacting the ups and downs of the market to deliver you the best terms.
CONTACT TROY STAVROS FOR HIS RECOMMENDATIONS ON TRUSTED KNOXVILLE MORTGAGE PROFESSIONALS.