Is now a good time to refinance my mortgage loan?
[ December 17, 2008 ]

One of the most frequently asked questions in today's troubled economy is, "when is a good time to refinance my mortgage loan?"


Unfortunately, there is no easy one-size-fits-all answer.  Whether you should apply for a mortgage refinance and if so, when to refinance, are dependent on your individual financial needs.  Everyone's situation is a little bit different.  As such, mortgage refinancing and whether to refinance are very personal issues. 


For the purposes of this article, let's assume that you've decided to refinance, but you've been waiting for the "right time." 


Mortgage Refinance rates have been fluctuating wildly in recent months.  We're seeing rates change sometimes 2-3 times a day and swing by as much as 1 full percentage point from morning to afternoon.  At no time in recorded history has the mortgage market demonstrated such volatility.


The volatility in the market is primarily being driven by the unending stream of bad news coming out of the financial sector.  Banks and investors have suffered huge losses as a result of the real estate market collapse and are afraid to lend or invest for fear of losing their money. 


Despite the fear and volatility, mortgage refinance loans are still available.  In fact, the US Government is working very hard to support the troubled real estate and mortgage sectors.


Several new initiatives from FHA, Fannie Mae and Freddie Mac are helping homeowners looking for a mortgage refinance loan to get the cash they need.


Some of you may be waiting for mortgage rates to hit rock bottom before refinancing your mortgage.  Some believe that recent FED rate cuts mean lower mortgage rates on the horizon.  DON'T BE FOOLED INTO MISTAKING A FED RATE CUT FOR A REDUCTION IN MORTGAGE INTEREST RATES!


Fixes rate mortgage loans of 15 years and 30 years are not typically tied to the FED Funds rate.  Instead, long term fixed mortgage rates fluctuate in relation to the demand for Treasury Bonds.


In troubled economic times, many large institutional investors flock to the relative safety of US Government Treasury Securities.  When they do, mortgage rates usually go up, not down.


As a result, predicting a market bottom and trying to time the lowest interest rates will be increasingly difficult as long as the economy is troubled.  One thing we can predict with certainty is that the market will remain volatile for the foreseeable future and we're likely to see big swings in interest rates (up and down) over the next several months. 


So, what is my advice for anyone looking to refinance their mortgage loan? 


Pick a target rate that works for you.  Maybe for you it's 6%, or 5.5%.  No matter what your target, pick a rate that you feel comfortable with and set that as your target rate. 


Predicting and timing mortgage refinance rates is very difficult.  I've literally seen rates on 30 year fixed FHA loans fluctuate from 5.25% to 6.25% in one afternoon.


So, Contact a mortgage specialist today and give them all of your information.  When rates hit your target level, have your mortgage specialist lock your interest rate immediately.


Contact one of our mortgage specialists to get your FREE personalized mortgage refinance quote. 



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