Rates go up and/ or down on a daily basis. When you are getting a loan, generally you will have the option as to when you can "lock in" to a certain rate. Locking in means you can freeze your rate and loan fees for a period of days while you are in escrow. Even if rates go up while you are waiting for your home to close, you will get the advantage of the lower interest rate and fees. To make sure you get the best rates, follow these tips:
Get pre-approved to find out what rates you qualify for.
- If you qualify for a VA Loan, take advantage of the benefits the government has provided you. Some benefits include different qualification requirements which can get you a better rate. Plus, you could save money each month by not having to pay mortgage insurance.
- Make sure you work with a reputable company when obtaining your loan and use one that is an "Equal Opportunity Lender". Try to get testimonials about the company to ensure they take care of their customers.
- Since rates fluctuate all of the time, it is best to speak with a Loan specialist so you can begin the process of getting pre-approved. Once you are pre-approved you have the option of locking in at a rate that is the most beneficial for you. < pre-approved Get>.
Begin the pre-approval process online or call 800-246-8708 to speak with a loan specialist now.
What will happen to the loan rates over the next few months?
Unfortunately, no one can know for certain whether mortgage rates will rise or fall in a period of time. Your banker or broker doesn't set the current rate you're charged. Most lenders sell their loans to FannieMae or FreddieMac, which in turn, dump these loans into what is called the secondary market.
The secondary market is where mortgage investors purchase loans that lenders make. These securities and portfolios get sold to mutual funds, Wall Street firms, and other investors who trade them the same way they trade treasury securities and other bonds. As a result of this business model, investors control setting mortgage interest rates.
When economic news may indicate the economy is heating up too quickly, Fed rates go up, to try to cool the economy. Investors then demand higher rates from their lenders. The only way for lenders to sell their loans in this market is to increase their yields they offer investors. This drives rates higher.
The same thing happens, but in the other direction, when it looks like the economy is slowing down. Investors start buying bonds because they figure the Fed will have to cut rates in the near future, in order to help stimulate the economy. If investors wait, they'll end up with lower-yielding bonds. Since investor demand is very strong, the lenders who control loan supply can offer lower yields to their customers. This creates lower interest rates for consumers.
An index is a financial instrument that the interest rate is related and adjusted to. The most common indexes are the LIBOR (London Interbank Offered Rate), 1-Year Treasury Security, Prime, 6-Month CD and the 11th District Cost of Funds (COFI). Each of these indexes move up or down based on conditions of the financial markets.
VA Loan Rates compared to other Loans
There are many types of mortgages, each offering different rates. For example, the traditional 30-year mortgage involves a fixed interest rate that is a slightly higher than a 15-year mortgage. VA Mortgage rates are also different than conventional rates. And it is generally recommended that if you qualify for a VA Loan, you should take advantage of your benefits in order to maximize the financial benefits you can receive from the low VA loan rates.
Find out what rates you qualify for - Get pre-approved now.
There are many alternative programs and payment plans which can give a lower initial mortgage rate and change after a certain period of time. There are many different mortgages for all types of situations, each with a different mortgage rate. In general, mortgage interest rates depend upon the economic climate and also on the type of mortgage that is involved.
You may call 800-246-8708 or contact us to get additional advice about what are the best rates right now, when you should refinance, what to keep in mind when getting your first mortgage or if you have any other questions.