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Profile picture for arashiku

mortgage rate negotiation

I understand that some lender offered lower rate but often with higher point or/and fee as a trade-off. I believe the interest rate being offered by lenders are controlled by the central bank correct?  My loan got approved but I have not locked the rate, is there any strategy to negotiate with the lender who already approved my loan after all?  I was just thinking all lenders would always charge the rate a little higher than what the central bank tells them.  Any input is appreciated.
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May 31 2010 - US
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I understand that some lender offered lower rate but often with higher point or/and fee as a trade-off

In general yes, but compared to what? There can be a .250 to .375 spread between 1 lender to the next.

I was just thinking all lenders would always charge the rate a little higher than what the central bank tells them.

There is no central bank dictating long term rates to lenders for 10 yr, 15 yr, 20 yr, 30 yr, 40 yr. Those rates move up and down acording to investors buying or selling mortgage backed securities, and each lender's offered rate depends on their overhead expense, pipeline, profit margin, etc.Your loan was approved using X rate and since you have not locked, you are " floating the rate". What is the rate and term you were approved for? eg, 30 Yr at 4.625% with 1 origination point, etc. 
Assuming your loan was approved using a 30 day rate, if the market was flat for the next 2 weeks you could improve your rate or pay less fees if you were to float until within a 15 day closing window because the loan will pay more or cost less for a shorter lock. On the other hand, you could see the rate jump up .250 overnight if investors get more confident over Europe and/or economic data shows strong growth like 500K new jobs as estimated for Friday's nonfarm payroll #. As of this morning, Europe is pulling our markets back down from last Friday but the ISM figure at 10:00 could reverse that if better than expected like 60 or higher, so that is why mortgage rates are defined as being volatile...
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June 01 2010
Profile picture for arashiku
Hi Clay, thanks!  I got my 30-fix loan approved with 84K loan amount and was @ 5.375 some weeks ago, with no point, was told today's rate is 5.25, we are planning to close in the mid-June, like in a couple weeks.  When is a good time to lock?  I know 5.375 v.s. 5.25 doesn't make a big difference, but economical wise, should I even bother waiting?  Would that be even to 5.00 next week after all? Thanks!
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June 01 2010

If you are getting a quote for 5.25% now then I dont think it will benefit you to wait for a lower rate. I dont know the specifics of your credit profile or type of loan but if you are getting an FHA loan, 5.00% would be more inline with no origination/discount fee on a 15 day lock.  

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June 02 2010
How long will you stay in your home? The lower rate will always win if you pay closing costs and stay in the home  to cover the estimated payback period.  A would lock now and close ASAP this market will not stay down like this for long. Rates come down like parachutes and go up like rockets!
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June 03 2010
 
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