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Straight Talk On Current Interest Rates For Ne Los Angeles Real Estate
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If you are one of the multitudes of buyers of checking out real estate in Northeast Los Angeles, there are things you must understand about current interest rates before throwing your hat into the market. Areas such as Highland Park, Atwater Village and Mt. Washington are heating up and you will want to be armed with knowledge about interest rates before securing a mortgage loan.
When looking for a lender to work with in the buying process, buyers tend to focus on who can give them the lowest rates. This isn't necessarily the best way to choose your lender. Here is straight talk from a lender regarding current interest rates:
During a fixed escrow period of 30 days, a lender really only has about 10-15 days in which to "lock" an interest rate. Therefore, small variations of 0.125% from lender to lender aside, the rate is basically going to be what it's going to be.
Buyers should understand that the rate they are going to get is actually more a function of the date they go into escrow and not really the lender they chose. From lender to lender, the rates are going to be pretty comparable.
Don't believe everything you read on line - bankrate.com, Google "rates" and most online searches for interest rates are driven by one thing: advertisements. These sites are notorious for bait and switch tactics and/or profiling the best possible scenario for which 90% of our clients don't qualify. Not sure what your personal experience has been with online advertisements, but if I bought stuff based on internet ads, I would have six-pack abs with no work required, a million dollar check coming to me weekly from Nigeria and would look like Brad Pitt. Needless to say, none of these have come true yet... I've tried .
Best way for novices to track rates - I pay thousands of dollars a year to get updates from Mortgage Market Guide, Barry Habib and Mortgage Toolbox type websites. Generally, these companies give great guidance on when to lock. I read technical reports and track rates across several different lenders on a weekly basis. That being said, the first thing I do every day when I wake-up is check the 10-year treasury. Simply go to www.Money.com and look at the 10-year treasury-yield on the upper right hand corner. If that number is green (going up), then we are generally in a rising interest rate environment. If that number is red (going down), then we are generally in a declining interest rate environment. A bank's margin for profit is usually 1.75% - 2.25% above this number. As of today the 10-year yield is at 2.88. Adding the bank's margin gives us a rate range between 4.63% to 5.13% - which is fairly accurate. This is oversimplifying a very technical process... but it's a good starting point.
What does Page 1, Section 3-C-1 REALLY mean - On page 1 of the purchase contract you will find the verbiage "Loan will be a fixed (or adjustable) mortgage and the rate shall not exceed ". This clause is here to protect the buyer and should be reviewed by listing agents. As of today I would put 5% on this line. The buyer needs to know they can cancel if rates jump unexpectedly and they are suddenly in a spot where they cannot afford the mortgage. The seller needs to know that this rate is not unreasonably low, and this gives the buyer a way to back out of the transaction should the buyer not qualify for the most attractive rates. This section has gone widely overlooked for the last 10 years as we have been in a declining interest rate environment. In an increasing rate environment, special attention needs to be given to this section for the foreseeable future.
I have found that different lenders offer different programs, different staff, and different ways of working that truly can make a big difference in qualifying for and completing a loan. That's why I only recommend a few lenders of the many I have worked with over the years.
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