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Get Quotes at the Same Time of Day

Don't bother getting interest rate quotes early in the morning, unless you're on the West Coast. Lenders don't price their mortgage rates until they've had time to digest all the daily economic reports that are released mid-morning East Coast time. Most lenders set their rates no later than 11:00 a.m. EST, some a little later, some a little earlier.

Rates can move throughout the course of the day. If they move wildly enough — about 1/4 of a point — lenders will “reprice” their loans — raising or lowering their rates and reissuing them.

Suppose you call two loan officers, speak directly with one, and leave a voice mail with the other. Later on in the afternoon, the loan officer for whom you left the message could call you back with a rate that's lower than the one you got from the first loan officer. If s possible that the mortgage markets were better in the afternoon and lenders adjusted their pricing. Thafs why you need to get your rate quotes at the same time of day.

Quoting with Points

This can be confusing and can muddy the rate waters if not approached correctly.

Points are sometimes called discount points, because paying points discounts the interest rate. One point typically reduces a 30-year fixed rate by 1/4 percent. If 7.00 percent is available with no points, then your loan officer may also offer 6.75 percent with one point.

A point is i percent of the loan amount. It comprises 100 basis points. So, one point on a $250,000 loan is $2,500. One basis point is 1/100th of a percent of one point. Rates don't change much in basis points during the course of a trading day. It is rare for a rate to change by anything more than 1/4 percent during the day.

A loan officer will have a variety of available rate and point combinations to quote to her borrowers. A typical rate sheet would look something like the table here:

30-YEAR FIXED RATE

Rate

Point(s)

7.00%

0

6.875%

1/2

6.75%

1.00

6.625%

11/2

6.50%

2

When getting interest rate quotes, it's important to make the rate comparison a constant in terms of points. The easiest comparison is a lender's rate for today with no points.

 
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