Mortgage rates climb for 2nd week

Mortgage rates crawled higher in Bankrate's weekly survey.

The benchmark 30-year, fixed-rate mortgage rose 2 basis points, to 5.34 percent, according to the Bankrate.com's national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.36 discount and origination points. One year ago, the mortgage index was 6.32 percent; four weeks ago, it was 5.36 percent.

The benchmark 15-year, fixed-rate mortgage also edged up 2 basis points, to 4.72 percent. The benchmark 5/1 adjustable-rate mortgage sank 7 basis points, to 4.69 percent.

Is it too late?

The credit -- intended to boost flagging home sales -- is set to expire Nov. 30. Congress is weighing several proposals to extend the tax break into 2010, but passage remains uncertain.

Procrastinating home shoppers racing to beat the late-November deadline still have a narrow window to wrap up their purchases, says Jeff Lazerson, president of Mortgage Grader, a mortgage broker based in Laguna Niguel, Calif.

"But buyers better hurry," he says.

Lazerson urges tax-credit hopefuls to work with at least three agents simultaneously until finding one who "demonstrates that he or she is really hustling." Buyers should also take an aggressive, hands-on approach to their search, he says.

"Proactively drive neighborhoods and knock on doors to learn more about appealing homes for sale that are nearby," he says.

David Kuiper, a mortgage planner at First Place Bank in Holland, Mich., also says buyers still have time to qualify for the credit, but only if they "enter a contract in the next week or so."

He suggests getting preapproved for a mortgage immediately and asking a trusted real estate agent to recommend a mortgage professional who has a record of closing on time.

"Plan to close by Nov. 20, if possible," he says. "Nov. 23 starts the week of Thanksgiving, and after the holiday there is only one business day left to close."

Kuiper says shoppers who dream of finding a great deal on a distressed property can forget about closing before the Nov. 30 deadline.

"Don't even bother looking at short sales," he says. "There is no chance that you'll negotiate a contract and close in this short time frame."

New rules slow process

Part of the problem involves new rules and regulations that have slowed mortgage approvals, he says. This includes the Home Valuation Code of Conduct rules, or HVCC, governing appraisals that went into effect in May.

"Much of the legislation coming out of Washington has made the standard process of approving and closing a loan much more intensive and lengthy," Sipe says.

The nature of today's transactions also makes a speedy approval less likely, he says.

"With most of the market being short sales and foreclosures, it takes longer to get responses from banks," Sipe says.

Homebuyers with the best chance of closing quickly on a sale include those with mortgages from governmental agencies such as the Federal Housing Administration or the U.S. Department of Agriculture.

"(They are) not subject to HVCC, so we can get the appraisal turned around faster," he says. "That makes a huge difference."

Extension question

Lazerson suspects such an outcome is likely.

"I believe the tax credit will be re-engaged or extended at some point," he says.

Sipe is less persuaded, citing a recent U.S. House of Representatives vote to extend the first-time homebuyers credit through Nov. 30, 2010, for military members serving overseas.

Although the move was widely seen as a precursor to extending the credit for all first-time homebuyers, Sipe says the vote may send the opposite message.

"If you were going to extend it for everyone at some point, why extend it to just this group now?" he asks.

As the debate over the likelihood of a credit extension continues, Lazerson urges shoppers to remember that homeownership is a substantial commitment "far outweighing the $8,000 tax credit."

"Buyers should not settle on a property they really don't care for just to meet the deadline," he says.

If you're in the market for a mortgage or refinance, you can look for the best interest rate by searching Bankrate's rate tables.