May 20th Best Mortgage Interest Rate 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 EVEN LOWER AS STOCKS STRUGGLE ***

The Labor Department�� announced that 471,000 new claims for unemployment benefits were filed last week, exceeding forecasts of 439,000 by a wide margin, favorable for mortgage rates. In addition, April's Leading Economic Indicators (LEI)�� showed a 0.1% decline when it was expected to rise 0.2%. As usual, what's bad for the economy is good for mortgage rates. The biggest mover today, however, is the stock market. As it continues to decline, investors favor bonds and mortgage-backed securities. This pushes prices up and rates down.

If closing in the next 60 days, I would LOCK my rate; if I could get a good deal locking after 60 days I'd probably lock even then; 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.