4 tips on how to watch the mortgage rate market
Submitted by Brian Mitchell, division manager with Gateway Bank Mortgage
Mortgage rates can stay constant for several days or change multiple times in an hour. This can make deciding when to lock in an interest rate very confusing for homeowners who are considering a refinance of their mortgage. It's tough to monitor interest rates with work, family and all the demands of everyday life, but no one wants to let a great rate pass them by.
Try these four tips on how to watch the mortgage rate market:
1. Set up a reminder to visit a website that publishes mortgage rate tables.
A rate table is a chart displaying the advertised rates of several banks, mortgage lenders and mortgage brokers. You can find mortgage rate tables online at websites such as Bankrate.com, ForTheBestRate.com or HSH.com. Pricing will vary by scenario based on many variables such as loan amount, credit score and the percentage of the property's value being borrowed.
In order to show a mortgage rate, the companies will base it on several assumptions. This will be listed on the rate table. It may say something like, "Based on a $200,000 loan for an owner-occupied home with a maximum loan to value ratio of 80 percent." Though your loan may not fit those parameters exactly, you can get an idea of which lenders are offering the most competitive pricing.
You can also watch as rates go up and down over time. Set up a reminder in the calendar on your PC or smartphone to check the rate tables daily so you will see when home loan pricing drops to the level where it makes sense for you to refinance.
2. Sign up for a rate watch email.
Some banks and mortgage lenders offer an automated service that will alert you by email, phone or text when rates drop to a certain point. Get quotes from several companies to find a few that generally offer low rates compared to the marketplace. Then check their websites to see which has a rate watch email sign-up option.
3. Ask a mortgage originator to let you know when rates drop.
One of the best ways to watch the market is to let an experienced professional do it for you. Ask a loan representative to call or email you when rates fall to the point where refinancing could save you money.
They can also let you know whether they believe that rates will continue to go lower or whether they are poised to rise again. While no one can say for sure how mortgage rates will change, it can be helpful to have an expert opinion for guidance.
4. Yield to the Treasury.
If you are looking for a quick real-time indication of interest rates, the yield on the 10-year U.S. Treasury bond is a good surrogate. Actual mortgage rates are driven by the yield on mortgage-backed securities; however, to monitor this market requires a very expensive subscription service.
The 10-year Treasury bond rate normally correlates very closely to mortgage bonds and is easily checked on financial websites such as CNN Money or Yahoo! Finance. It will not tell you exactly what rates are, but if you see the 10-year yield moving up or down, you know mortgage rates are likely headed in the same direction.
However you choose to watch the market, it's smart to know where rates need to be in order for a refinance to make sense for you. Run the numbers now using an online mortgage calculator or with the help of a mortgage professional. That way you won't be stuck deliberating while a great rate passes you by.
Be sure to research the mortgage companies you are considering before committing to a new loan. Find out about their track record at the Better Business Bureau and AngiesList.com.
Brian Mitchell is a division manager with Gateway Bank Mortgage, a mortgage company based in North Carolina. He entered the mortgage industry in 2004, after earning an MBA from the University of North Carolina Wilmington.
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