When shopping around for mortgage interest rates, there are several things you can do to improve your chances of getting a very competitive rate from a reliable lender. Things like improving your credit, shopping around, and getting rate guarantees will all help you to find the best rates available.

First things first, take stock of your credit and review your overall financial situation. By paying all of your bills on time and keeping low balances on your credit cards, you can improve your credit score. A good credit score is essential to getting a low interest rate, since mortgage lenders use your score to determine what type of risk is inherent with offering you a loan.

One way to improve your standing in the eyes of a mortgage lender is to close any unneeded credit accounts. This includes things like department store credit cards, regular credit card accounts, and any other accounts that you don’t need. If you have a lot of credit accounts, lenders will see that you are capable of racking up a large amount of debt. This increases your risk level, and subsequently, the interest rates that they will offer you.

When shopping around for mortgage interest rates, get the lender to guarantee you the rate in writing. Some lenders may ask you for payment in order to get this guarantee, but if the rate is good enough, it might be worth it. Just make absolutely sure that the rate is locked in for a period of time that will allow you to close the loan first.

If you have cash on hand and want a lower interest rate, you should consider paying points. Points are basically pre-paid interest on your loan that will get you a lower monthly payment. However, points are not for everybody. If you are going to stay in your house long enough to recoup the expense of paying points, then the savings you receive from your lower interest rate will be worth it.

Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.63 percent with an average 0.4 point for the week ending July 3, 2007, down from last week when it averaged 6.67 percent. Last year at this time, the 30-year FRM averaged 6.79 percent.

The 15-year FRM this week averaged 6.30 percent with an average 0.4 point, down from last week when it averaged 6.34 percent. A year ago, the 15-year FRM averaged 6.44 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.29 percent this week, with an average 0.4 point, down from last week when it averaged 6.30 percent. A year ago, the 5-year ARM averaged 6.39 percent.

One-year Treasury-indexed ARMs averaged 5.71 percent this week with an average 0.4 point, up from last week when it averaged 5.65 percent. At this time last year, the 1-year ARM averaged 5.83 percent.

http://www.freddiemac.com/dlink/html/PMMS/display/PMMSOutputWk.jsp?week=27&ending=20070705

“Long-term mortgage rates continued to move lower for a third consecutive week, in part reflecting a moderation in core inflation,” said Frank Nothaft, Freddie Mac vice president and chief economist. “In the statement accompanying their decision to leave the target federal funds rate unchanged, the Fed noted that core inflation had declined recently, though a ’sustained’ moderation is still to be seen, and signaled that inflation risk continues to figure prominently in their policy decisions.

“Helping to ease some inflation concerns, May’s personal consumption expenditures report found that the core price measure had increased 1.9 percent for the year ending in May, within the 1 percent to 2 percent range with which the Fed is comfortable, and the lowest year-over-year rise in more than 3 years.”

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than four million renters in America.

Pending home sales, a forward-looking indicator, showed existing-home sales in the United States may ease but should stay fairly close to present levels in the months ahead, the National Association of Realtors (NAR) said Tuesday. The NAR’s pending home sales index, based on contracts signed, stood at 97.7 in May, its lowest point since September 2001, down 3.5 percent from the previous month. The decline followed a 3.2 percent drop in April and a 4.5 percent dip in March.

The May figure was 13.3 percent below the reading of the same month of last year. In April, the index was 10.4 percent lower than a year earlier.

Lawrence Yun, NAR’s senior economist, stressed that housing activity continues to be impacted by tighter lending criteria and a lack of buyer confidence.

“Some transactions are being postponed from mortgage market disruptions,” he said. “But better supervised lending will put housing in a fundamentally healthier state over the long term.”

The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

The NAR is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Before you begin shopping for mortgage interest rates, it’s important to familiarize yourself with two of the common factors that will affect the terms of your loan: points and lock-in periods.

If you are simply contacting lenders and asking for information on their interest rates, you probably won’t be able to make even comparisons between different companies. One lender might quote you on a no-point loan, while another may give you the interest rate for a 2 point loan. Or a lender could quote you on a 7-day lock while another gives you the information for a 45-day lock. You need to tell each lender specifically what you’re looking for so you can get comparable quotes from several different lenders.

When you start calling mortgage companies, you need to know two things: how many points you would like to pay and how long you want to lock in your rate for. Even if you aren’t necessarily intent on locking in your rate, it’s important to give the same information to all lenders in order to receive comparable quotes. It’s also very important to call all of the lenders on your list on the very same day. Since rates don’t stay the same every day, calling lenders on different days will get you extremely different quote ranges.

When shopping around, you can’t place much trust in advertisements that you come across in your local paper, on television, or on the radio. These advertisements were most likely submitted a day in advance at the very least, and therefore, interest rates have probably changed since they were written.

Most ethical loan officers will give you a reliable quote when you contact them, even if they know that you’re shopping around. However, there are some lenders out there that aren’t always truthful. They may exaggerate their rates or promise things they can’t really deliver. Some may even go as far as to increase your interest rates at the last possible moment when there is little you can do to get out of the contract.

If you want to avoid unethical lenders, it is a good idea to get referrals from people who were pleased with the service they received from their lenders. Shop around for interest rates from this exclusive list of reputable mortgage companies.

Treasuries finished with gains today in light trading as some participants sought the protection of government bonds in a holiday-disrupted week. The gains came despite a surge in the stock market. In late trading, the 10-Year Treasury Note was up by 10/32, lowering its yield to 4.99%; the Dow was up by 126.81 points to 13,535.43; and the Nasdaq was up by 29.07 points to 2,632.30.

The flow into bonds came from traders putting money into the relative safety of government securities in a week in which foreign investors will be trading on Wednesday while U.S. markets will be closed. Following the events in Great Britain in the last few days, the heightened concern of possible terrorist activity during the holiday may also have been a factor in today’s advance.

Trade meant to offset losses in subprime mortgage backed securities is also being cited as a positive influence on Treasuries.

The economic release of the day had conflicting market implications. The ISM Index of the nation’s manufacturing sector showed better than expected growth in June. But the rate of growth for prices paid by manufacturers eased somewhat for a second month.

The manufacturing and price data constituted a double-plus for stocks and news of several M&A deals also helped fuel today’s rally. An initial pull-back in oil futures lent early support, as well, but oil prices ultimately turned higher on the day. A barrel of light, sweet crude oil for August delivery rose by $0.41 on the New York Mercantile Exchange to settle at $71.09, the highest close for a front-month contract since last August. The record high close was $77.03 on July 14 of last year. Nevertheless, the Dow gained 0.95% on the day; the S&P 500,
1.07%; and the Nasdaq, 1.12%.

The only major release tomorrow is the report on factory orders for May. With last week’s weak report on durable goods orders, analysts are looking for an overall manufacturing order decline of between 1.0% and 1.5%. This would be the first decline since January. Sub-categories that will be closely watched are orders excluding transportation and orders excluding the defense sector. Transportation is highly volatile due to swings in aircraft orders and the
needs of the defense sector are not governed by standard market forces. The category of ex-defense capital goods minus aircraft is also seen as a key indicator of core business demand.

The Securities Industry and Financial Markets Association has recommended that bond trading end early tomorrow (2:00 PM instead of 3:00 PM Eastern Time). Some additional safe-haven buying ahead of the Independence Day holiday may offer some support in the morning but light trading volumes may produce unpredictable price moves. All domestic markets will be closed on Wednesday. Thin, defensive trade is expected on Thursday as well since the
highly-influential employment report is due out on Friday.