How Do I Get The Best Interest Rate?

This is a question I deal with almost every day. Buyers want to
buy more house to lower their payment with a low rate. Homeowners want to lower
their current payments and hit the market lows. Shoppers "dial for
dollars" by calling every lender on the internet to find the best base
rate available. At the risk of starting an endless journey, I'd like to give
some guidance.

Let's start with a little perspective. Here is a line I've used
for 30 years - when rates were 12% and 4%. MORE PEOPLE DIE TRYING TO HIT THE
BOTTOM OF THE MARKET THAN EVER HIT IT. The second bit of rationalization I
share is that THERE IS ALWAYS A BETTER RATE!

No one can predict the market so you are much better off
understanding your goal and putting together a risk/reward evaluation based
upon that. How much stress can you take to save $20 per month? The auto
industry was very sharp to understand the public was having trouble getting
used to paying $50,000 for a car. So they stopped selling the price and began
promoting the payment. That's why we lease cars instead of buying them today.

If you have a $200,000 30 year fixed rate mortgage, the difference
in payment between a 4% note rate and a 4.125$ rate is $14.32 per month.

Interest rate markets are fluid and they change every minute of
the business day. To compare rates you need to understand what your profile is
and compare them all in the same day. If you don't use these two rules you will
be chasing the pot of goal at the end of the rainbow. You may also end up with
a worse price because you talked to someone on a better day.

So how is a layman to find a good deal without being taken
advantage of. First of all, find an advisor you trust rather than a rate that
is hot. There are differences in lender prices and costs. Just make sure you
are getting a full value instead of a smooth, fast presentation.

If you shop rates online, you will see the best rate for the top
borrower in the perfect scenario. The rate you receive will be adjusted based
upon the loan balance, the loan to value ratio, your credit score, how long you
lock it in for, whether it is a primary or secondary home and if it is a
purchase or refinance. Know who you are and get rate quotes accordingly.

Interest markets, like the stock market have been very volatile at times this year.
There have been some basic trading ranges, however. The markets have drifted
between end of the world scenarios and the rosy future outlook. In general they
have risen and dropped like a wave graph that has taken about two to three
weeks to run through a cycle. The object has been to find the right day to lock
in your rate. Finding a good day as compared to a bad day can make up for
everything else discussed in this blog.

In general, bad news is good for interest rates and good news - not so much. A good
indicator is the stock market. When the stock market is up, money flows out of
bonds and pricing gets worse. So look for a day when the Dow is off 200 and
take a look at rates. The lowest rates available this year was when the Dow
sold off 1900 points. There is a silver lining in every storm cloud.