July, 2004

With mortgage rates rising, it's only natural for house hunters to look for ways to bag lower rates.  But not all the options are great.  Here are a few of my recommendations for today's mortgage climate.

*  Don't take an extended lock.  Locking in a rate for 30 days is usually adequate now that lenders are not as swamped, and that time frame is most often free of charge.  A longer lock of 60 or 90 days can cost up to 0.25 percent.

*  Don't buy into the buydown.  Paying points up front to lower a rate makes sense only if you'll be in the home long term.  Move or refinance and you will lose all that prepaid interest. 

*  Do consider a hybrid loan.  Since the typical homeowner moves every six years on average,  thousands could be saved with a hybrid adjustable-rate mortgage which offers a fixed rate for the first five to seven years at one to two percentage points below a 30 year fixed rate mortgage.