Mortgage Rates at 4.5%!!!

This is the million dollar question everyone is asking themselves right now… Will mortgage interest rates reach 4.5%, or possibly even lower? Presently homeowners are anxiously watching interest rates in a hope to refinance their loan at the most premium interest rate possible. I would like to share with you some critical information about the forecast of interest rates and how to set yourself up to achieve the best rate possible as you get ready to refinance.

Forecasting Interest Rates

Currently we are in a market where mortgage interest rates are extremely volatile. Some days we are seeing interest rates change as much as three to four times per day, meaning if you miss out on a targeted rate in the morning; it might not be there in the afternoon! The Obama Administration is doing everything in their power to decrease interest rates by injecting stimulus into the economy, purchasing stock in Fannie Mae and Freddie Mac, and most importantly the Federal Reserve is purchasing mortgage backed security bonds at an alarming rate. However, the banks and lenders are resisting and fighting the reduction of interest rates for a couple of reasons. First, there is concern as interest rates decrease more and more people will refinance their existing mortgage and the Investors who purchased the bonds securing their loan will lose out on any profits as these loans are paid back well before their expected term is fulfilled. Additionally, banks and lenders are concerned the majority of homeowners will not be able to refinance at these lower interest rates due to extenuating circumstances, such as qualifying their income, appraisal values, and borrower’s holding out for even lower rates. This thought pattern is reflected by the number of loan applicants who missed out on locking a premium interest rate a few months ago as they were gambling rates would continue to fall. Second, there is a concern banks and lenders will need to increase staff and support due to the new loan modification program presented through the Homeownership Affordability and Stability Plan. There will be an obvious influx of calls, questions, and mortgage reviews as a result of this program and banks/lenders might increase interest rates as a way of curtailing new applications as well as helping to afford any additional staffing at this time.

How Can You Set Yourself Up to Refinance at the Best Time?

It is my professional opinion interest rates will fall again. In fact, mortgage interest rates have greatly improved in the past couple of days. In order for you to have the ability to take advantage of the best rates there is a simple process you must follow! Below is a three step process I am recommending we follow which will ensure your success:

Get Your Docs In:

In order to lock in an interest rate once the targeted rate is met, I need to make sure we can get you approved for a new loan. The only way I can do this is to review the required information necessary for underwriting your loan. Let’s get the busy work out of the way upfront and put your family in a position where you are approved for a loan and the only thing we need to do is monitor interest rates. Additionally, this will permit us time to make sure all the necessary documentation is prepared and ready to submit. This will decrease the amount of time your file waits in underwriting and further allows us to avoid extending any interest rate locks.

Communication is Paramount:

We need to talk about the goals your family is looking to achieve through refinancing your home. As we evaluate your goals we can set aggressive targets to monitor so we are ready to act once these interest rate targets are met. I would be happy to meet with you and review all possible loan scenarios and answer all of your questions so you have the greatest amount of information necessary to make the most educated decision.

Pull the Trigger:

If I have received and reviewed all the necessary documentation in order to approve your loan, and we have communicated with one another the goals you are looking to achieve through refinancing your mortgage; there is only one step left. We monitor interest rates and pull the trigger and lock in a rate once your goal is achieved. I pledge to you to be in consistent communication throughout this period so you are constantly aware of the fluctuation of rates and what to expect next.

Here are a couple of last thoughts to keep in mind. I want you to be successful, remember that I am working for you! Do not get caught in the trap where if rates fall and meet the 4.5% mark, you decide to hold out for 4.0% or even 3.5%. If there is savings on the table it is my advice to take them while they are available. We are in a period of historically low interest rates and we most likely will not see mortgage rates at these levels for quite some time. It would be unfortunate if you missed out on a premium interest rate only because you were waiting for another decrease of .25% or .50%. Keep in mind; markets today are shifting and behaving in odd ways. We have seen rates gradually decrease, but have been jumping back up in a matter of days, if not minutes.

This is a pivotal time in the financial markets throughout the world, it is imperative you work with a banker who understands the economy and can help guide you through this process. Please contact me at calvinbui@gmail.com so we can begin this simple three step process and get you on a path to success. It is not a time to reinvent the wheel, do not make this harder on yourself than it needs to be!