After Ben Bernanke’s recent message to investors that the Fed will purchase maturing Mortgage Backed Securities (MBS) as opposed to taking the maturing funds out of the system, interest rates have taken a dive.
The Fed is further attempting to stimulate the housing market and give current, and new home owners a break with lower rates in the form of lower mortgage payments.
Take the Gift and Act Now !
We have been very pleasantly surprised at falling interest rates and feel anyone with a sizable mortgage (Greater than $100k) may want to review the possibilities of re-financing while rates are so low (this may change in the future…a subject for another time.)
Current rates for longer term mortgages (30 year fixed) are in the mid to high 4% range in the Texas area and finally jumbo or non-conforming loan rates are also lower.
A Few General Thoughts (not recommendations, only suggestions)
- Eclectic Mortgages are mostly gone, i.e. Interest Only and negative amortization; If you have this type of mortgage, be sure to carefully review your current mortgage costs versus your new, you may already have a good plan for your situation.
- Refinancers’- Attempt to keep the cost of your refinancing versus your monthly savings approximately 18 months or shorter (Cost of refinancing / Monthly savings =< 18 months if possible)
- If you intend on being in your home for the foreseeable future, think strongly about a 30 year Fixed mortgage, rather than a 15 year mortgage, as you can add extra payments to accelerate your mortgage, but back off on the extra if needed.
- Put your patience hat on; The mortgage qualification process has changed dramatically, is more complicated, and requires more disclosures than ever before; Take your gift, but remember do not kill the messenger, many requirements are beyond your lender’s control.
- If you are uncertain on your future residence or know you may be moving, don’t despair as your new home will hopefully be financed with the current excellent rates.
In closing, we cannot express enough, patience, patience, patience! Be prompt with your requested documents, and do not kill the messenger, loan financing is sometimes a stressful situation, you are both on the same team.
Please consult your loan professional before acting, these statements are not meant as an automatic recommendation to refinance your mortgage, each situation is unique.
Have a Great Day !
JK