GFE Interest Rate

[foofighter74]

I don't buy it.  I'd shop around. 

[violetsmom]

Ugh.  Our original GFE from December when they started on our house was 3.75.  Last week I was quoted 4.125% and my LO scared me into locking in our of fear it could go to 4.25.  I am still seeing 3.75% and lower all over the place so I am confused as to why it is so high.  Our FICO score used was 711.  We have to use this lender too.  I feel like I got screwed

[playboy]

Violet, you must remember mortgage interest rates will follow the yields on the 10 or 30 year Treasury Notes.  The higher the yield (interest rate) on t-notes the higher interest rate banks will quote for mortgages.  If the yield on the treasury notes are low you'll see banks quoting lower mortgage rates.  The Feds have a 10 and 30 year yield table on their website which lays out the rates by day, month and year.  So if you look closely, you'll notice that mortgage interest rates quoted by banks will change from day to day or week to week.  Compare that to the treasury notes rates and you see the correlation.  If it's a USDA loan, USDA has specific requirements which state that the lender must use Fannie Mae's 90 day mandatory delivery rate for 30 year mortgages.

[violetsmom]

LO told me if we waited it out we could maybe get to a 4%. 

[playboy]

Your LO is guessing bc he or she doesn't know how the t-note yields will go. I think that they've been trending up last time I checked. Look at trend & that'll give you some indication.

[violetsmom]

Honestly it is all Greek to me   Just noticing many people (here and in my real life) locking in with a 3.xx and wondering why we are locked in higher with decent scores...

If I am locked in doesn't that mean that the rate can't change, even if a lower rate becomes available before we close?  I know this is a question for my LO but she never gives me the time of day unless she needs something from me...

[foofighter74]

There are some lenders who will allow you to "float down" for a fee if interest rates drop i believe. 

Anyway, you may be looking at people whose rates are for FHA loans.  As I said, the FHA rate with no points quoted by our lender, and still listed on their site, is 3.25% But a 30 year conventional loan from the same lender is at 3.625% as of yesterday.

[ashdown1967]

Hello,

What lender did you use and what were your scores?

Thanks

[JM-AM]

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@playboy wrote:

Violet, you must remember mortgage interest rates will follow the yields on the 10 or 30 year Treasury Notes.  The higher the yield (interest rate) on t-notes the higher interest rate banks will quote for mortgages.  If the yield on the treasury notes are low you'll see banks quoting lower mortgage rates.  The Feds have a 10 and 30 year yield table on their website which lays out the rates by day, month and year.  So if you look closely, you'll notice that mortgage interest rates quoted by banks will change from day to day or week to week.  Compare that to the treasury notes rates and you see the correlation.  If it's a USDA loan, USDA has specific requirements which state that the lender must use Fannie Mae's 90 day mandatory delivery rate for 30 year mortgages.

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While many use this as a guide, it is not how its done.

It is a misconception that 80% of LO's and Brokers will also agree with, but are point blank wrong.