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BEND, Ore. (CNN/Money) - If you're just
now shopping for a mortgage, the bad news is that you've missed
out on the lowest mortgage rates in four decades.
The 30-year fixed loan rose to 6.34 percent
in the week ended Aug. 29, according to HSH Associates, up from
its low of 5.37 percent in June.
But there's a bright side -- lenders have
to work harder for your business these days.
Back when rates were at their lowest levels,
mortgage bankers were flooded with applications, so much so
that there was little wiggle room for borrowers to negotiate
on rates, fees or closing dates.
"Some companies were just assigning people
a closing date," said Douglas Duncan, chief economist for
the Mortgage Bankers Association of America (MBAA). The time
it took to close on a loan went from 30 to 50 days to more than
60 days.
But all of that has changed in just a matter
of months. "Lenders don't have people beating down their
door for their loan," said Keith Gumbinger, a vice president
of HSH. "You're more in the captain seat than you were
even a week ago."
Refinancing demand has fallen for nine consecutive weeks now
and is at its lowest level since June 2002, according to the
MBBA. Demand for new mortgages remains strong, though many concede
that this is only because buyers are rushing to lock in rates
before they go any higher.
"Anecdotally we're hearing that lenders'
pipelines (pending mortgages) are down 50 percent from their
peaks," Duncan said. "There is no question companies
are seeing the pressures of competition."
So if you're looking for a mortgage, by all
means ask: "Is that your best offer?"
Let's make a deal
As always, your first priority should be finding the lowest
interest rate. And while rates have been going up, competition
is expected to help hold them down, said A.W. Pickel III, president
of the National Association of Mortgage Brokers.
You may be able to get the best deal on rates
and closing cots from your current lender. "But don't just
call your lender out of the blue," said Anthony Hsieh,
CEO and founder of HomeLoanCenter.com. "See what others
are offering and then go to your own lender. They'll dig into
their discounts if they feel they are going to lose you as a
customer."
When shopping around, be sure to pay close
attention to the many variables that go into a home loan. That
includes the interest rate, the terms of the loan, up-front
points and, finally, closing costs.
"I would question any fee," Duncan
said, adding that lenders have wiggle room when it comes to
the fees they charge, including application fees, underwriting
fees and document preparation fees. "Let them know you're
comparison shopping among several lenders."
Typically lenders do not have to give you
a "good faith estimate" of closing costs until you
actually apply for a loan, in which case they have three days
to give you that estimate. But now that lenders are more eager
for your business, you may be able to get such an estimate even
before you apply.
Keep in mind that your good faith estimate
is only any estimate. Lenders can -- and have -- surprised borrowers
with new or higher fees just as they're about to close on their
loan. (See "Take a bite our of closing costs.")
Of course, now that banks are tripping
over themselves for your business you probably can rest easy
that the only last-minute changes will be in your favor.
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