Given the Economy, Is Now the Right Time to Refinance?

Question

What do you think, everyone?  Is now a good time to get in touch with your lender or start shopping around for a new loan, or should we all wait for some kind of bottom?

Calixto Urdiales · Answer

To refinance yes that is a definate.
But i would say that now is the best time to buy and hold, but only if one is willing to hold on for sometime to come.

We see this happen every so often and it keeps repeating itself (the only thing that is different is the severity) so buy, hold, and then sell four -five years down the line.

Aaron Pfeffer · Answer

It's a good time to refinance if you're saving money and not putting your financial future at risk.  That may sound like a load coming from a mortgage broker, but I'm speaking as objectively as possible, with no other motive than to share thoughts.

It's tough to predict interest rates.  Ok, so the Fed cuts rates and HELOC's & credit card rates are more enticing -- but part of the reason they cut rates is to even out the 10 year bond so mortgage rates even out too.  This used to be a staple of American economics for decades, but it is no longer the case, as too many other factors cause the bond to fluctuate now.  It's so tough to predict what will happen, or for what reason.  Early last week the bond got shelled and rates plummeted, then just a few days later it rebounded and massive YSP was gone overnight.

If you're a borrower in a conforming loan amount and your rate is in the 6%s, and you're smart enough to figure out how to get yourself into the 5%s in a long term fixed no cost loan...consider it if the savings make a difference.  Perhaps interest rates will dip back into the 4%s again, but that is not what the Fed is trying to accomplish.

Ask yourself what monthly savings will make you happy or make a difference rather than worry about the 1/8 or 1/4 percent you saved yourself because you picked the right day to call your lender.

Michael Rossi · Answer

Since even us dummies on the internet understand this, why can't the Fed?  Their previous screw up CAUSED the housing bubble and now their current stupidity will cause the high inflation that is coming.  It's ridiculous.

Mike

Michael Shadow · Answer

I agree with Ryan that the days of high interest rates are coming again soon.  It's the only way to stop the inflation.  The current low rates coupled with the  100s of billions of dollars that the feds are going to print this year is setting us up for some scary high rates in the future.

Ryan Webber · Answer

I agree, interest rates are definitely headed lower in the near future.  I think they are predicting a 50 basis point decrease at the next meeting.

I wouldn't wait too long, though.  As inflation gets out of control in the next year or so, I would be surprised if we don't see double digit interest rates again.  We're in for a roller coaster ride, and dropping the fed fund rate will provide a temporary band-aid but will facilitate longer term problems, mainly inflation, that can only be fixed by raising rates back up and letting the recession run its course.

Christopher Lippincott · Answer

We're not at a bottom yet

The secondary side of the market is not purchasing so the products (loans) aren't all that attractive "yet". We need a supply and demand fury to set some new lending standards and get the risk factors reduced

There are obvious loans that would benefit someone that bought a year ago with good credit but I'm waiting until jobless reports and Bernanke (FOMC) offers his next drop,

I'd say wait a little while (spring)

Michael Rossi · Answer

I agree, interest rates are headed lower.

Mike