On a related note, we accepted an offer on our old house today. Going to close before the end of August. Yippee! We had it on the market for 3 days...
Actually, an ARM is a good loan for a specific type of buyer. If you buy a house and know for a fact that you will be selling it again in a short time, an ARM is good. You will have MUCH lower interest rates for that short time than you would for a fixed-rate. This is especially good for people who want to flip a house (buy it low, remodel it, sell it high, make a profit). However, if you don't sell the house and you stay living there with the ARM loan, it's damaging.
If you are a week or two away from signing the contract on your mortgage application, you should pay attention to the Ten Year Treasury note. The yield is listed on Yahoo Finance and other places. http://finance.yahoo.com/q?s=^TNX Basically the mortgage interest rates will follow the direction of the 10 year note. So if you see the yield of the 10 year note increase, you will see your mortgage rates offered to you increase. But the key thing is there is about a week delay. So if you see the 10 year note increase in price over the course of a few days, you would be best served locking in your mortgage interest rate pretty soon, since the mortgage rates will soon follow upward about a week later. When you hear that bond prices are going up and down, it means the yields are moving in opposite directions. So if they say bond prices are going up, that means yields are going down. Over the past few weeks the 10 year note, has been going up in price since investors are worried about keeping their money in the stock market. Thus they want the safety of government Treasury bonds. So they have been buying Treasury bonds like the 10 year note, and bond prices have been rising, but this causes yields to fall. So some home buyers in the short term have seen a little lower mortgage yields since the yield on the 10 year note has fallen.
I'm just reiterating that you don't have to "rate shop" or "watch the market" or anything if you're able to get the bond money that I posted about earlier. The rates are just ridiculously better than the market anyway if you can get the funding. And you don't have to absorb the costs in the cost of the house or anything like you do in a lot of other gimmicky programs. Just free advice.
