Mortgage Rates

May 24, 2015 09:16 PM Eastern

Refinance rates now in Woodbridge, NJ[Change this]

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Home Price (Purchase)
When you get a mortgage to purchase a home, the lender uses the lower of the agreed-upon purchase price or the property's appraised value to determine your maximum loan amount. The loan amount divided by the property home price equals your loan-to-value ratio, or LTV. That ratio is one of the major factors that lenders use to set your mortgage rate. If your LTV exceeds 80 percent, you'll probably be required to pay mortgage insurance, which increases your monthly payment. If the property appraises for less than the agreed-on purchase price, you are not usually required to complete the purchase.
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Home Value (Refinance)
This is your estimate of the current value of your property. When you refinance, your home is almost always evaluated by a licensed appraiser. The refinance loan amount divided by the property's appraised value equals your loan-to-value ratio (LTV), and that number is one of the major factors that determine your mortgage rate. To get an accurate refinance rate quote, your home value estimate must be reasonably accurate.
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Down Payment
The down payment is the amount you pay upfront when you finance property. Your purchase price minus your down payment equals your mortgage amount. The higher your down payment, the more likely you are to be approved for a home loan. If your down payment is less than 20 percent of the purchase price, you'll probably be required to pay for mortgage insurance, which increases your monthly payment.
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Credit Score
Your credit score is a number designed to measure your credit-worthiness. It's based on a formula that combines many factors, including your payment history, amount of credit used and number of accounts. This number is used by lenders to calculate the probability that you'll default on your mortgage. Most lenders won't approve mortgages to applicants with credit scores lower than 620. Your credit score is one of the most important factors that determines your mortgage rate - applicants with higher scores are offered better mortgage rates.

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Mortgage rate quotes displayed on LendingTree LoanExplorer℠, including loan pricing data, rates and fees, are provided by third party data providers including, but not limited to, Mortech®, a registered trademark of Zillow®, LoanXEngine, a product of Mortgage Builder Software, Inc., and LoanTek, Inc.

Mortgage Rate Trends

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Mortgage Rate Lock Recommendation

May 22 2015
  •   Lock if closing in 7 days:
    Rates are up
  •   Lock if closing in 15 days:
    Rates are up
  •   Lock if closing in 30 days:
    Rates are down

Today's consumer price index (CPI) numbers were pretty much as expected. Energy prices are firming up after their tumble, and a barely perceptible increase in the CPI was widely anticipated. For all urban consumers, it climbed just 0.1 percent on a seasonally adjusted basis. The index for all items less food and energy rose 0.3 percent.

Yesterday's Conference Board's composite index of leading indicators (which looks at 10 indicators of economic activity that could suggest whether the economy's heading into a peak or trough) was more exciting. The consensus forecast among analysts was for a rise of 0.3 percent in April. In the event, at +0.7 percent, the outcome was a pleasant surprise.

Pleasant surprises have been a rarity of late, and other data released yesterday were more on-trend. April's existing home sales failed to meet analysts' rosy expectations, falling 3.3 percent, while weekly job figures showed 10,000 extra initial unemployment insurance claims over the previous seven days.

All this feeds the debate that continues to rage between economists. On the one hand, are the optimists, who believe that the weak first quarter and so-far generally disappointing April data are results of exceptional factors, that the economy's fundamentals are sound and that normal growth should resume soon. On the other are the pessimists, who remain deeply concerned that the strong dollar is significantly and adversely affecting trade and growth.

It emerged Wednesday, on publication of the minutes of the Federal Open Market Committee's last meeting, that the debate now extends to its exalted members. The Financial Times' report on the minutes said: "Doubts about the strength of the US recovery appeared to grow among Federal Reserve policymakers in their latest rate-setting meeting as soggy economic data pushed back the prospects of a near-term rate hike."

However, the focus for those interested more immediately in the direction of mortgage rates remains the bond market, which has been unusually volatile recently. In particular, 10-year U.S. Treasury bonds are important, because they're the ones that compete most directly for investors' money with the residential mortgage market.

Yesterday, yields for those closed at 2.19 percent, which was seven basis points below Wednesday's figure. However, that's still elevated compared with the 2015 average, and only 9 basis points shy of this year's high. Although mortgage rates don't directly shadow these 10-year bond yields, there is a relationship between them.

The occasional looseness of that relationship was underscored by the fact that average mortgage rates remained essentially flat -- in spite of those bond yields spiking -- during the week ending May 21, according to Freddie's weekly rate figures, published yesterday. The average rate for a 30-year fixed-rate mortgage fell back by a single basis point to 3.84 percent with a 0.7 point. However, that is still not far off the 2015 high.

Forecasting the direction of mortgage rates is difficult at the best of times. Something that might generally push them up (bad economic news, say) can also exert a downward force (because investors tend not to fear inflation or have as many attractive options when times are tough) -- and vice versa. Those forecasts are especially perilous when the future prospects of the American and other economies are so hard to judge. However, absent shock developments, few expect significant or rapid changes in mortgage rates within the scope of these rate lock recommendations.

What Does it Mean to "Lock" Your Mortgage?

"Locking" your mortgage means that you and your lender have agreed on an interest rate and price for your home loan. Once your loan is locked, that's the rate and price you get, regardless of what happens in the financial markets. If rates go up, you're protected but if rates go down, you won't benefit either -- you close your loan at the rate you've locked and you can’t change it. Locks have expiration dates ranging from 30 to 60 days or more, and the longer your lock period, the more it costs. If you don't close your loan on time, you could end up paying a higher interest rate.

When Should You Lock?

You can lock in your loan at any time during the process. Until you lock your interest rate, you are said to be "floating" your mortgage. The only rule is that you have to lock in before you can close on your purchase or refinance.

The decision to lock or float your loan can have a long term impact so it’s important you make the right choice. That’s why we offer a quick rundown of the key factors that drive mortgage rates today and everything you need to know.

Mortgage Rates by State

Mortgage rates can vary a lot between lenders on any given day. So, if you only get one mortgage quote, you won't have any idea if there's a better deal out there. That's why the best way to get a mortgage rate it to request quotes from multiple lenders and compare interest rates, loan terms and closing costs. It puts you on in charge and keeps the banks competing to get you the best rate possible. Remember, even .1 percent can amount to thousands of dollars over the course of a loan. Make sure you shop around!

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