January 27th Best Mortgage Interest Rates and Lock Recommendation

Here is today's look at best mortgage rates, (which do not include discount points, origination points, or loan level risk based price adjustments) provided by Mortgage News Daily, Freddie Mac, and other sources. Note that Freddie Mac's AVERAGE rates are typically higher than BEST rates, because average rates include surcharges for risks associated with property types, down payments, and credit scores. To be eligible for BEST rates, borrowers need spotless credit (740 score or better), a sizable down payment (20-25%) or equity amount, and stable, adequate, and documentable income. In addition, the property must be located in a healthy (not declining) market and must be conventionally built.

LOCK ALERT *** RATES INCREASE AFTER FED STATEMENT***

The FOMC meeting ended today, and the Fed's statement repeated its earlier forecast that conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period."?? In addition, the Treasury Dept auction of 5-year notes was met with good demand. However, rates did increase as bond and mortgage-backed securities fell, most likely due to the fact that one Fed member dissented and feels that the recovery has taken hold enough that rates should be increased. This blip is likely to be short-lived.

If closing in the next 30 days, I would LOCK my rate; otherwise, I would FLOAT my rate. This is only an opinion--what I would do if I were closing a mortgage at this time. Your decision may depend on other factors such as the strength of your loan approval and your tolerance for risk, and must be made with those in mind.

Liz Freeman has more than a decade of mortgage lending experience. She writes about mortgage and finance issues and is a regular contributor to Mortgage News Daily.