Mortgage rates are remarkably favorable, with the 30-year fixed remaining unchanged from the previous week's record low.
The benchmark 30-year fixed-rate mortgage remained 4.88 percent this week, according to the Bankrate.com national survey of large lenders. The mortgages in this week's survey had an average total of 0.48 discount and origination points. One year ago, the mortgage index was 5.76 percent; four weeks ago, it was 4.96 percent.
The benchmark 15-year fixed-rate mortgage fell 1 basis point, to 4.32 percent. A basis point is one-hundredth of 1 percentage point. The benchmark 5/1 adjustable-rate mortgage rose 3 basis points, to 4.19 percent.
In the nearly 25-year history of Bankrate's weekly rate survey, the 30-year fixed has fallen below 5 percent just five times. And all five times were the last five weeks.
Refinance surgeAccording to the Mortgage Bankers Association, refinance applications went up 21 percent last week, as homeowners recognized the rare chance to grab rates at their lowest. They created the busiest refi surge since May 2009. Three-quarters of mortgage applicants were homeowners who wanted to refinance.
"My philosophy on refinancing is that anybody that could have refinanced to get a low rate, at this point, already did," says Dale Robyn Siegel, author of the book "The New Rules for Mortgages" and owner of Circle Mortgage Group in Harrison, N.Y.
Weekly national mortgage survey
Results of Bankrate.com's June 16, 2010 weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
Today's refinancers are looking for more than just a lower rate, she says. They want to merge their first and second mortgages, or consolidate other debt, or reduce their mortgage terms from 30 years to 20 years or 15 years.
"Get something else out of your effort and time, other than just lowering the monthly payment," Siegel says.
Lock or wait?Inevitably, refinancers ask whether they should lock rates shortly after applying or wait until the closing date draws nigh. The answer sometimes depends on the policy of the lender and sometimes on the philosophy of the loan officer.
"Some banks now require that you lock the loan in when you send the loan application in," Siegel says. "So if you apply today, some banks will lock you in today."
Siegel says she prefers to wait and lock customers' rates around 15 days before the closing date. These days, it takes about 45 to 60 days for her company to close refis. So borrowers are asked to summon the courage to float their rates for a month or more.
Bob Walters, chief economist for Quicken Loans, leans more toward locking a rate earlier in the process. Either way -- float or lock -- Walters advises borrowers to keep emotions in check.
"It's OK to float your loan, but understand what's happening," he says. "You could be refinancing and you decide, 'Hey, I'm going to hope for a lower rate, so I'm going to float' -- and then rates go up and all of a sudden your deal doesn't make sense. The opposite can happen, too, and you can lock your interest rate and they go down and you find yourself in a tizzy."
Bottom line: You're in charge of your own emotions. Only you can send yourself into a tizzy. When you decide on a rate lock strategy, don't second-guess yourself.