Personally, I would not wait for the proposed, much talked about 4.5% mortgage interest rate. Check out the last word from this Sunday's Seattle PI's real estate section: "4.5% mortgage rate seen as possible".
For the most part, mortgage interest rates are determined by supply and demand: they are bonds (mortgage backed securities) that are traded. The Treasury has been discussing buying mortgage backed securities (MBS) from Fannie Mae and Freddie Mac which should lower rates. Mortgage interest rates are not set or directly controlled such as the Fed Funds rate where the Fed decides exactly how much the rate will adjust, if at all. Another factor to consider, if this becomes more than the current speculation, is that the talk has just been about purchasing Fannie and Freddie MBS. Those who would potentially benefit from the future lower rate would need to qualify for a conventional mortgage.
What would I do if I were considering a refinance?
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Contact a qualified mortgage professional who has the ability to float down or renegotiate your rate should they dramatically drop after your rate is locked.
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Consider pricing the mortgage as a no-cost refinance so that should rates drop low enough, you can refinance again should it be justified.
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Have a plan. Review your goals with your mortgage professional to make sure refinance makes sense. If you're not planning on retaining your mortgage long enough to break even, it may not make sense to proceed with a refi. Focusing just on the rate and not factoring in closing costs and break-even periods can be costly.
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Get ready. Apply early so you're in the best position to lock. If today's current rates do not pencil out, determine what rate will. Some mortgage professionals will agree to a "forward lock" in the event your target rate (or better) becomes available.
If a refi boom happens, be prepared for the transaction to take longer. Fact is, there are now fewer people in this industry from Loan Originators, Processors, Underwriters and Escrow Officers to handle the increased volumes.
Questions? I'm licensed to provide mortgage in Washington State. Contact me.
Related posts:
Declining Home Values: Good for Buyers, Bad for Refi's
Why Your Loan Originator Needs a Complete Loan Application Before Locking
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