Shopping for HARP Rates in Your Area
Shopping for Home Affordable Refinance Program (HARP) rates can be just as frustrating as shopping for any traditional loan. Rates fluctuate on a day to day basis, determined by the Fed and in correlation with current market fluctuations as well as changes in the economy. HARP was created to offer homeowners a valuable refinancing tool to help them deal with complications which arose during the economic recession of 2007 and 2008. With this type of mortgage product at your disposal, you can finally get back to a situation where you’ll have equity in your home and a monthly mortgage payment that is more manageable for your circumstances.
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How to Shop for the Best HARP Rates
Finding the best HARP rate, like finding any loan rate, is not a simple task. You need to shop around with HARP certified lenders and keep an eye on economic trends. You can find a HARP lender today by talking to one of our Mortgage Advisors. The Fed sets the rates daily and they can fluctuate depending on unemployment, job growth, and other economic factors.
While you’re shopping for interest rates, it is important to make sure you’re asking all the lenders for their rates on a given day so you have a good comparison of their actual costs. If you look at one lender one day and another lender the next day, you may not actually be receiving comparable quotes for the loan. Our team of Mortgage Advisors at MortgageAdvisor.com can help make the process a lot easier by finding the best lender for your situation.
Once you’ve found an interest rate you are comfortable with and have found a lender you like, it is time to lock in that rate with your lender. Lenders have different lock periods, some for two weeks, a month, or even sixty days. Should you choose to opt for a different rate during that period, there is usually a re-locking fee, which may be worth it if rates have improved enough to cover that cost.
It is good to pay attention to economic trends while looking for an interest rate to lock in. The more you know about what is going on, the more likely you are to be able to lock in the best available rate at the time.
Inflation is one of many economic factors that affects the daily interest rates. As signs of inflation increase, interest rates tend to go up. This affects all loans, including HARP rates. As inflation drops, interest rates will usually follow as well.
The Federal Reserve
The Federal Reserve, or The Fed, is the establishment that sets the base interest rates for the country. They take into account all economic factors such as inflation, employment, and unemployment statistics, and market fluctuations, to set the rates for the day. When the economy is underperforming, the Fed will usually lower rates to try and stimulate lender spending to boost the economy. These periods of time tend to be the most desirable to lock in your interest rate for your HARP.
Gross Domestic Product (GDP)
The government measures the total balance between spending and income in the form of the GDP. This is a good marker for the health of a country. A high, healthy GDP usually means the economy is moving in a positive direction. Along with that movement, interest rates tend to go up. In times of a low GDP, interest rates will similarly drop in an effort to improve the economy.
HARP interest rates are closely related to unemployment rates as they are a major determining factor on the overall health of the economy. HARP rates tend to drop when there is higher unemployment in an effort to combat deflation due to a poor job market. When more people are employed, those rates will rise.
Our political and economic climate is greatly affected by the larger, global economy. Worldwide events and economic trends are also used when calculating how rates will be formed for any period. Spikes in gas costs and overall energy expenses can cause interest rates to drop. This, in turn, will lower prices across the globe and also make for lower interest rates.
The Secondary Market
The Secondary Market is also known as the lending and investing market. This is where lenders go to sell packaged loans to investors. Investors are looking to make a safe return over time based on a bundle of insured loans. Investors’ confidence in the market and how they choose to or not to trade their bundled investments can also play a role in fluctuations in daily interest rate trends.
The Bottom Line
The bottom line is there are several factors that play into what sets rates from day to day. While it can be hard to keep an eye on all of these factors, the more you are aware, the better you will be at understanding which direction interest rates will move over time and why. If you can understand this process, you are more likely to know when to lock in a good interest rate. And, of course, a qualified lending professional that you can find from MortgageAdvisor.com will be able to help you navigate all this information so you can make the best decision available for your situation.