For most consumers, the most important part of finding the right mortgage is convincing themselves they have found the “lowest” interest rate. This is understandable, as the interest rate is certainly is an important component of the mortgage. Obviously one of your goals should be to achieve a great rate; however, how does one go about accomplishing this? There are a few things that someone refinancing or purchasing a home needs to understand.

 First, one needs to know that ALL mortgage rates that have low-fixed rates (FHA, VA, Rural Development and Conventional) are driven by the daily trading of mortgage-backed securities. These mortgage bonds trade on the Chicago Board of Trade. This is very similar to how stocks trade on the NASDAQ and DOW. Just like stock prices, mortgage rates change weekly, daily and even hourly; therefore, obtaining the lowest rate can be somewhat elusive. (If you would like keep up with the mortgage market, click on the weekly mortgage market update on this site, or go to DavidLukas.com)

 Suppose you lock in your rate with your lender that you decide to go with. Three weeks into the process, you are getting ready to close your loan. A day before your loan closes, the bond-market rallies and mortgage rates drop a quarter of a percent. Now all of a sudden have you really gotten the lowest interest rate? Are you going to stop the entire process, transfer your appraisal, delay your closing and switch lenders only for the same scenario to possibly happen again? What if two days after your loan closes, rates drop even further? Have you achieved the lowest rate available? The answer of course is no.

The reality is that mortgage rates are affected by many factors within the economy. If myself or anyone else for that matter knew the exact hour and day rates would be at their lowest, we would all be rich. So as you can see, achieving the “lowest” rate can be problematic; therefore, your best shot is to ask around and find someone who understands the dynamics of the mortgage market and can help you decide when to strategically lock in your interest rate. Make sure you are working with a mortgage professional that has access to live, real time, mortgage bond quotes. If the lender you are speaking with cannot explain how mortgage bonds and interest rates are moving in real time and warn you of costly intra-day price movements, you are most likely not working with a professional whom you want to entrust financing one of your largest assets, Your Home.

I have seen people obsess over getting the “Lowest Rate”, only to miss the boat. Even if you were able to attain the “Lowest Rate”, this is only one piece of the puzzle. There are so many factors that you want to take into consideration other than just your interest rate. A great rate on the wrong mortgage strategy, can literally cost you tens of thousands of dollars over the life of your loan. It is very important that you ask around and find a loan professional that takes into consideration your overall long and short term financial goals. Your mortgage is such a large component of your financial life.

 Don’t entrust the process to someone who has diminished such an important transaction in your life into nothing but rates and fees. Unfortunately most loan officers have commoditized the industry and have become nothing more than order takers. Yes the interest rate and the fees you pay are important, but overlooking all other aspects of what you are looking to accomplish can cost you dearly. If you utilize your mortgage properly, it can be an integral in helping you reach your short and long term financial goals.

I encourage you to visit the CMPS Institute. This is a great place to start your search for a loan professional who approaches your mortgage from a financial planning perspective.

David Lukas is an active loan officer and can be reached at David@DavidLukas.com or by calling 501-952-3090. Also be sure to visit www.DavidLukas.com

For most consumers, the most important part of finding the right mortgage is convincing themselves they have found the “lowest” interest rate. This is understandable, as the interest rate is certainly is an important component of the mortgage. Obviously one of your goals should be to achieve a great rate; however, how does one go about accomplishing this? There are a few things that someone refinancing or purchasing a home needs to understand.

 First, one needs to know that ALL mortgage rates that have low-fixed rates (FHA, VA, Rural Development and Conventional) are driven by the daily trading of mortgage-backed securities. These mortgage bonds trade on the Chicago Board of Trade. This is very similar to how stocks trade on the NASDAQ and DOW. Just like stock prices, mortgage rates change weekly, daily and even hourly; therefore, obtaining the lowest rate can be somewhat elusive. (If you would like keep up with the mortgage market, click on the weekly mortgage market update on this site, or go to DavidLukas.com)

 Suppose you lock in your rate with your lender that you decide to go with. Three weeks into the process, you are getting ready to close your loan. A day before your loan closes, the bond-market rallies and mortgage rates drop a quarter of a percent. Now all of a sudden have you really gotten the lowest interest rate? Are you going to stop the entire process, transfer your appraisal, delay your closing and switch lenders only for the same scenario to possibly happen again? What if two days after your loan closes, rates drop even further? Have you achieved the lowest rate available? The answer of course is no.

The reality is that mortgage rates are affected by many factors within the economy. If myself or anyone else for that matter knew the exact hour and day rates would be at their lowest, we would all be rich. So as you can see, achieving the “lowest” rate can be problematic; therefore, your best shot is to ask around and find someone who understands the dynamics of the mortgage market and can help you decide when to strategically lock in your interest rate. Make sure you are working with a mortgage professional that has access to live, real time, mortgage bond quotes. If the lender you are speaking with cannot explain how mortgage bonds and interest rates are moving in real time and warn you of costly intra-day price movements, you are most likely not working with a professional whom you want to entrust financing one of your largest assets, Your Home.

I have seen people obsess over getting the “Lowest Rate”, only to miss the boat. Even if you were able to attain the “Lowest Rate”, this is only one piece of the puzzle. There are so many factors that you want to take into consideration other than just your interest rate. A great rate on the wrong mortgage strategy, can literally cost you tens of thousands of dollars over the life of your loan. It is very important that you ask around and find a loan professional that takes into consideration your overall long and short term financial goals. Your mortgage is such a large component of your financial life.

 Don’t entrust the process to someone who has diminished such an important transaction in your life into nothing but rates and fees. Unfortunately most loan officers have commoditized the industry and have become nothing more than order takers. Yes the interest rate and the fees you pay are important, but overlooking all other aspects of what you are looking to accomplish can cost you dearly. If you utilize your mortgage properly, it can be an integral in helping you reach your short and long term financial goals.

I encourage you to visit the CMPS Institute. This is a great place to start your search for a loan professional who approaches your mortgage from a financial planning perspective.

David Lukas is an active loan officer and can be reached at David@DavidLukas.com or by calling 501-952-3090. Also be sure to visit www.DavidLukas.com

Conforming and FHA mortgage rates improved last week on the combination of weaker-than-expected economic data and new anti-banking rhetoric from the White House.

The S&P 500 shed nearly 4 percent in its worst weekly showing since October 2009 as all 10 sectors fell. As the money left stock markets, it made its way to bonds — including the mortgage-backed variety.

As a result, Arkansas mortgage rates fell for the third straight week.

Since shedding 300 basis points in December, mortgage bond pricing has recovered a bit more than half of those losses.  It’s helping with home affordability and opening new refinance opportunities in Little Rock and around the country.

This week, though, mortgage rates could rise back up.  There’s a lot going on.

First, on Monday, the December Existing Homes Sales report will be released.  The report is expected to be extremely weak as compared to November.  This is because of a combination of factors including:

1. The initial tax credit expiration date of November 30, 2009
2. Sharply rising mortgage rates throughout the month of December
3. A general slowdown from the holidays and from the weather

Therefore, don’t be surprised by the newspaper headlines you see Tuesday morning.

Other data this week includes the Case-Shiller Index – a measure of home prices nationwide — and the New Home Sales report. The Case-Shiller Index has registered mild home price improvement over the past 8 months and its latest report is expected to show the same.  New Home Sales should be similarly strong.

But, the biggest news of the week is the first Federal Open Market Committee meeting of 2010. 

The Fed meets Tuesday and Wednesday this week and Wall Street will be watching closely.  The Fed is not expected to change the Fed Funds Rate from its current target range of 0.000-0.250 percent, so, instead, markets will watching for the Fed’s post-meeting press release.

What the Fed says about the economy will be much more important that what it specifically does about the economy for now.  If the Fed says the economy is growing as expected, look for mortgage rates to rise. Conversely, if the Fed says the economy is at risk, expect mortgage rates to fall.

The safest rate lock strategy this week is to lock your mortgage rate before the Fed’s 2:15 PM ET adjournment Wednesday.  Rates will be bouncy all week, but once the Fed’s press release hits the wires, it’s anyone’s guess what will happen.

David Lukas is an active loan officer and can be reached at David@DavidLukas.com or by calling 501-952-3090. Also be sure to visit www.DavidLukas.com