Know your lender-and don't forget old-fashioned horse-trading.

It pays to know every trick in the book about how your clients can lock in a good mortgage rate when rates rise.

A rate increase today is apt to hurt more than it did six or seven years ago, notes David Olson, managing director of Wholesale Access, a Columbia, Md.-based mortgage research firm. That's because lenders, citing prepayments due to refinancings, are pricing about 75 basis points more into 30-year fixed-rate mortgage rates then they did prior to 1997. Today, you can expect to pay 200 basis points more than the benchmark ten-year Treasury note.

So what can you do to cut the damage of rising mortgage rates?

Check out a lender's rate breakpoints. Mortgages may have breakpoints on rates based upon the amount borrowed, advises Christopher Zehnder, a CFP licensee in St. Cloud, Fla. Zehnder, who served as a mortgage banker for 15 years, says that if your client is interested in borrowing $98,000, it could pay to borrow $100,000 if $100,000 is a breakpoint for a lower rate. Rates may drop at certain intervals as the borrowed amount rises, he says. Conversely, if your client borrows too little, the rate might be higher because it costs more for the lender to process.

Try to negotiate a shorter "lock-in period" for your client. But beware. If the lender fails to close in that time frame, the rate jumps to market. Many banks, he says, will offer "lock-in" periods for seven, 30, 45 or 90 days. The shorter the lock-in period, the lower the rate.

Avoid locking in a mortgage rate on Fridays. Many lenders, may keep rates artificially high over the weekend, Zehnder says. They're fearful of having to honor the large number of rates obligated on Friday, Saturday and Sunday if the market moves dramatically on Monday.

"Look at the bond market," Zehnder adds. "If the bond market is up, sometimes the rate will fall the following day."

Use the Internet and newspaper information. Play one lender against the other. In an active rate environment, a mortgage broker or banker may cut his commission to close the deal. A lender, he says, typically figures it's better to earn something than nothing.

Consider a "hybrid" mortgage. Such mortgages, with rates that are fixed for three, five or seven years before becoming subject to annual changes, could lock in a lower rate for a specified period.

Make certain your client has checked and corrected his or her credit report before searching for a mortgage. Daniel Mulligan, a San Francisco-based consumer lending attorney, says he was surprised at the very attractive mortgage pricing he saw one person obtain from Bank of America in Charlotte, N.C.. The reason: Larger banks use risk-based pricing and lower rates for their most creditworthy customers.

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