Mortgage rates hit record low

Mortgage rates dropped down to another record low.

The benchmark 30-year fixed-rate mortgage fell 7 basis points this week, to 4.88 percent, according to the national survey of large lenders. A basis point is one-hundredth of 1 percentage point.

This was the third time in four weeks the benchmark 30-year rate has set a record low in Bankrate's weekly survey. The old record, set two weeks ago, was 4.92 percent.

Bankrate began conducting the weekly survey in September 1985. According to data from the National Bureau of Economic Research, it appears mortgage rates haven't been this low since the summer of 1956.

The mortgages in this week's survey had an average total of 0.5 discount and origination points. One year ago, the mortgage index was 5.95 percent (more than a percentage point higher); four weeks ago, it was 5.07 percent.

The benchmark 15-year fixed-rate mortgage fell 3 basis points, to 4.33 percent, also a record in the Bankrate survey. The benchmark 5/1 adjustable-rate mortgage fell 5 basis points, to 4.16 percent.

Mortgage rates stumbled upon the release on Friday morning of the May employment report. It showed that the economy added 431,000 jobs in May -- and that 411,000 of those were temporary jobs with the U.S. Census. Hiring managers for private companies practically took the month off. Bond yields fell upon that grim news and mortgage rates followed.

If you gathered all the people who are able to refinance their mortgages and all the people who already have refinanced, the two groups would be almost identical.

"Eighty percent of the country has refinanced," says Marc Demetriou, mortgage consultant for Residential Home Funding Corp.'s office in Bloomingdale, N.J.

Most of these home loans have been classic rate-and-term refinancing, but other refis are driven by divorces and consolidating debts.

Demetriou says today's refinancers should ask their lenders: "How many days is it going to take to close the loan, and how many days are you locking me for?" With luck, Demetriou said he can close a loan in as little as 15 days after application. Most of his customers close within 26 days.

Closing less than a month after application isn't typical right now. With many refinances filling up the mortgage pipeline, most lenders are advising customers to lock their low rates for 45 or 60 days. If the process is glitch-free -- and that's a big if -- a wage-earner's refi should be able to close within 45 days, in most cases.

Paul Anastos, president of Mortgage Master, a lender based in Walpole, Mass., offers some advice.

First, "make sure you get the deal that you were promised upfront, when you were talking to the loan officer," he said. Read the disclosures and ask questions.

Second, "Be cognizant of the fact that a lot more documentation's required now," he said. Because of the losses that lenders incurred in the housing meltdown, "they're certainly looking for far more supporting documentation than they did in the past."