BILL'S ANSWER
"Where are mortgage rates headed?" is a very common question that Bills.com receives. No one has a crystal ball that shows whether rates are going to rise or fall. What you need to do, if you are a homeowner, is figure out if refinancing today can save money or help you accomplish other financial goals that you have.
Save Money
Don't focus on which way rates are headed. Instead, review the mortgage rates available today and think about whether refinancing will help you.
Refinancing can help you in the following ways:
- Save money each and every month. Refinance to a lower rate, improving your monthly cash-flow and realizing significant savings over the course of your loan.
- Shave time of your mortgage. Refinance to a shorter-term mortgage, such as 15-year mortgage, where mortgage rates are even lower than on the 30-year loans. Your total interest costs will be significantly less in a 15-year mortgage and your savings massive, if you can afford the monthly payment.
- Reduce your risk. Refinance an adjustable rate mortgage into a fixed-rate loan. This way, you can avoid rising payments when mortgage rates eventually increase.
Given the extreme volatility of the market, mortgage rates could shoot upwards at any time. All it will take is for one piece of good news about the economy and today’s opportunity will go away. Rates may drop slowly, but they shoot up quickly.
Historically Low Rates
However, since we are still enjoying historically low mortgage rates, look in to refinancing today. Bills.com offers several ways for you to check mortgage rates -- you can use our average mortgage rates table or get free mortgage quotes from our network of lenders.
Mortgage rates are at historic lows and the government has been pumping money in to the mortgage market to help keep rates low. Timing mortgage rates is tricky and difficult to do (like timing the stock market). The strategy we endorse is to first define your goals with your mortgage refinance. Are you trying to lower your payment, get cash out or just reduce the amount of interest that you pay over the life of the loan?. Next, check that a refinance at today's rates make sense for you -- would a mortgage refinance save you money? You can do this by comparing your current loan payment against a new loan payment and identifying the difference between the two.
Comparison Shop
Lastly, find at least three reputable lender or brokers to provide your information; in turn they will provide you with quotes. Bills.com provides a lender matching service that matches you with a few specific lenders our of our network of more than 150, based on your your specific needs. Another good method for finding reputable lenders is to ask friends, coworkers or family who have recently refinanced or purchased a home, for a reference. Compare the quotes that you get from each lender -- and make the decision based on which loan helps you reach your mortgage refinance goals. Make sure to look at the costs associated with each mortgage quote and not just the mortgage rate you are offered.
The bottom line is that you can't guess the direction of mortgage rates. They are currently at historic lows and now is a great time to refinance -- if a mortgage refinance makes sense for you now, we strongly urge you to lock in a low fixed-rate mortgage now, rather than waiting.
I hope this information helps you Find. Learn & Save.
Best,
Bill
November 19, 2010
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