Mortgage rates volatility… Can you hedge your decision to lock your interest rate?
When we purchased our first home in 1982, my wife and I locked in a 12% rate on a Land Contact and we were thrilled. Back when the 30 Year fixed rates were 16+%. When we purchased our second home in 1989 we secured a mortgage on 30 year fixed rate at 8.75% and again I thought I was brilliant since rates had been hovering for years over 10%. Today, those rates sound absolutely crazy! Today’s rates on a 30 year fixed rate conforming loan (under $417,000) as I write this (1/17/11), the 30 year fixed rates are hovering in the high 4’s and 15 year terms in the low 4’s. This past November those rates were in the high 3’s and mid 3’s for the same. We had never seen rates like those going all the way back to 1950’s (the oldest chart I located). What should you do today? Call me today for a free, no obligation, current rate quote with a low or no closing cost option and see how we can improve your situation.
So are some homeowners still waiting for lower rates to refinance or purchase?
Some clients are optimist thinking rates are going lower…until they don’t; the bond market (which determines mortgage rates) can be fickle. The one thing it has taught us is that rates can go up much faster than they come down. Since everybody has a different tolerance to risk it is best to know what you are risking by waiting for rates to drop further. While some potential clients may get hung up on the rate itself, when in fact getting started with a shorter term can be the real savings for you today! This volatility makes timing the bottom very difficult, to near impossible. In your decision to move forward in a refinance, find a lender who can show you the savings that you can lock in today, with perhaps both a lower rate and shortened term. For example if you have paid on your 30 year mortgage for a few years and the rate is in the mid 5’s plus, we have placed many clients on a 15 or 20 year term reduced the Rate and reducing the Term so in essence reducing the total of payments. It is not as much your interest rate as it is the term of your mortgage that will affect your true net worth the most! If you would like to see how this would work in your situation, give me a call or email me and of course there’s no cost and certainly no obligation.