The very first Friday of every month is filled with awe and shock as the release of the monthly employment data will rarely be a very calm event. In the first week of April, 2013, the March data was released and it didn’t disappoint in terms of surprise! According to the news, the Mortgage Backed Securities (MBS) price improved by 40 basis points and by 122 basis points for the entire week. MBS usually goes up in a weak economic state and the increase in MBS is indirectly proportional to the mortgage rates; when MBS prices move up, the mortgage rates plummet. So, if you’re a resident of California who is in the market to pick his share of mortgage loan, there’s good news for you. However, you need not rejoice so much as to forget asking yourself the most important question ‘how much house can I afford’ before taking the plunge.
The California mortgage rate outlook – What does the unemployment report say?
According to reports of the second week of April, the unemployment rate of California hit at 7.6% down from 7.8% and this so far looks good enough! No matter the spin, the unemployment reports were weakest since last June. As for the decline in the unemployment rate, this indicates that an increasingly large number of discouraged workers are no longer looking for jobs. As interest rates have been rising throughout 2013, the California market has suddenly taken a U-turn. The reports show that the 30 year fixed rates in California fluctuated from 3.35% in November, 3.35% in December, 3.41% in January, 3.54% in February and 3.57% in March. The market may remain volatile on some days and might also fluctuate during some days. But over the next few weeks of 2013’s 2nd quarter, the rates are rarely going to change.
Test your shopping skills – Tips to sharpen your skills and crack the best deal
When it comes to borrowing for a home loan, shopping for the best California mortgage rate has always been a dream for the homebuyers. The challenge with this strategy is that there is various misleading information that are released. Here are some tips to sharpen your skill and get the mortgage rate.
• Practice the bait and switch technique: There are some mortgage lenders who will advertise very low rates to set their official phones ringing. However, you should be aware that often the advertiser offers an abnormally low mortgage rate with the intention of using a ‘bait-and-switch’ technique once the client is reeled in. Avoid falling prey to such scams.
• The short lock period: The average borrower enters into a purchase contract to purchase a home at least for 30 days. Pricing on an interest rate that is locked for a 7-day period is just useless for most prospective homebuyers. This is simply not enough time to complete the entire transaction. The lock-in period is often not realistic in terms of providing enough time to negotiate the purchase and close the deal. So, you should be careful when a rate is quoted as you need to ask the lender what the lock duration time is.
• Check if points are included: Additionally, apart from the above points, you should also take into consideration that the interest rate is not the only vital factor that should be taken into account. Another question that you should make is how long the borrower needs this money. The length of time that is involved in borrowing the money has a huge impact on whether or not one should pay the upfront fees.
• Comparing the APR might not always work: Another marketing ploy that makes mortgage interest rates seem attractive is geared towards the manner in which the fees are presented. You should be aware that APR takes many fees associated with the loan into account and this is usually listed in fine print as disclaimer. Read the fine print in detail.
As the price of mortgages will gradually rise throughout 2013, this is perhaps the best time to take out a home mortgage loan in California. Manage your finances in the best way possible and repay the mortgage loan on time to avoid a hit on your credit score.