January 17, 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 FLAT ON VERY LIGHT TRADING **

As expected, the bond market opened up 2/32 of a point, which should improve this morning's mortgage costs by approximately 0.125 of a discount point from Friday's morning pricing. The decrease may be short-lived, though, as stock prices are up thanks to global good news about the Chinese and German economies that came in over the weekend. When stock prices increase, they often bring mortgage rates along for the ride.

Additional inflation concerns stem from the increase of oil prices by 2 percent, to $100.70 a barrel. Once again, there is a greater downside associated with floating your mortgage rate, and I recommend locking if you can.

If closing in the next 30 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.