January 10, 2012 best mortgage interest rates and lock recommendation

Here is today's look at best mortgage rates provided by HSH.com, Mortgage News Daily and other sources. These do not include loan-level risk-based price adjustments imposed by Fannie Mae and Freddie Mac. Note that average mortgage rates are typically higher than the best mortgage rates, because average rates include surcharges for risks associated with property types, down payments and borrower credit scores. To be eligible for the best rates, borrowers need excellent credit with a score of 740 or better, a sizable down payment or equity amount of 20 to 25 percent and stable, adequate, verifiable income. In addition, the property must be located in a healthy, not declining market and must be conventionally built. Condominiums, manufactured homes and farms do not apply.

LOCK ALERT *** RATES BOUNCE UP FROM LOWS ***

Not surprisingly, rates corrected slightly after hitting all-time lows Monday. Interestingly, the slight weakness in mortgage-backed securities markets today was not enough to account for the pricing increases implemented by a number of lenders. That's your cue to shop before you lock, because rate increases are not necessarily tied to an across-the-board rise in lender costs, and not all mortgage companies have upped their pricing.

Tomorrow's Treasury auction of 10-year notes, if well-received, could trigger roll-backs in mortgage pricing. Stay tuned.

If closing in the next 15 DAYS, I would LOCK my rate. Otherwise, I'd 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.