Cash in on low mortgage rates

The interest rate environment continues to be favorable for mortgage borrowers. Thanks to the Fed and low inflation, interest rates have been held down: The average 30-year fixed rate is 6.83%. And there are no signs that such rates will significantly rise or fall in the near term.

This is the best time to refinance. Consider shortening the term of your loan from, say, a 30-year fixed-rate to a 15-year fixed-rate mortgage. Moreover, take advantage of lower rates to ease your burden through debt consolidation-car and installment loans as well as credit cards.

Just how low should rates be for you to consider refinancing? If it’s a percentage point or more lower than what you have. Also, you’ve struck a great deal if you’re able to recoup refinance charges within 14 months.

James R. DeBoth, president of Mortgage Market Information Services Inc. (MMIS) in Villa Park, Illinois, says that when shopping for a mortgage you should probably follow the five guidelines below:
Talk to a real estate agent or broker. Lenders regularly call agents to alert them to new financing arrangements and packages.

• Look for rate surveys published in your local newspaper. Many papers provide brief tables on interest rates and mortgage availability.
• Shop for quotes by telephone. Check out the Yellow Pages under mortgages. Call at least five to 10 different lenders for rates and terms on fixed- and adjustable-rate loans.
• Try computerized mortgage shopping and online services. Many of these services have local lenders on their listings. Two such Internet services, LendingTree (www.lendingtree.com) and MMIS’s site (www.interest.com), match online shoppers with banks and finance companies based on their credit history and income.
• Evaluate the annual percentage rate. This figure includes discount points and other charges and spreads over the life of the loan. It indicates the effective rate of interest paid per year.

Since mortgage rates fluctuate, lock in the mortgage rate you are quoted if your closing will take place within 20 to 60 days (common lock-in periods range from 30 to 90 days). Should you opt to float your mortgage rate, be sure to keep tabs on interest rate movement, particularly that of Treasuries. The yields on one-, three- and five-year Treasuries can be good gauges of the introductory rate on adjustable-rate mortgage (ARM) loans.

The Best One-Year ARMs in the Top Metros
City	Lender Name	Rate	Down Payment	Pages: 1 2 ACROSS THE WEB Loading... A-   A   A+