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The U.S. Federal Reserve Board members have surely lost their share of sleep over the past couple of months and they are about to lose more. Last month the Feds cut interest twice in hope of stemming off inflation and slowing the mortgage fiasco that has gotten a grip on the U.S. economy but the plan backfired. Inflation in the U.S. economy is showing signs that are leading the economy directly towards recession. The signs include slow economic growth, the rise in unemployment, a sharp spike in oil and food, a slumping housing market and overall inflation. Although the Feds have lowered interest rate twice in January, at a total of 1.25 percent, and are expected to cut interest rates again in March, it does not mean that mortgage rates or even credit card rates will automatically decline. When the Feds cut interest rates it affects the price of money that banks lend to one another. When banks begin to lose a big chunk of money, like they are in the U.S. real estate market, they need to raise their interest rates in order to make back some of their loses. Many lenders in the U.S. are likely to follow suit of their counter parts overseas which have been raising interest rates even with government rate cuts. It is the Fed’s duty to assure Americans that the economy is healthy and can recover but they should also prepare citizens for a recession that is surely to hit. The window for U.S. consumers to put themselves into a stronger financial position is still open, but you must act fast. Mortgage rates have been steadily increasing over the past 3 weeks and may reach new heights before the end of the year even with more rate cuts scheduled. Here are a few tips that may help you determine if refinancing your home is right for you. First and foremost refinancing your home has really never been about the lowest mortgage rate. The mindset of getting the lowest mortgage rate got a bunch of consumers who took out option arms at 1 percent in plenty of trouble. When shopping around for a new mortgage, get quotes on up to 4 mortgage programs, not just 4 mortgage lenders, that include fixed and adjustable rate mortgages that are fixed for at least 5 years. If a 30 year mortgage payment may be stretching it a bit ask for options on a 40 year or even 50 year mortgage. Once you find the right program for your situation is when you start to worry about what the interest rate is. Purchasing a home during the mortgage meltdown can still be a wise investment for homebuyers who are simply looking to find a place to call home. It is a buyers market which means you have more options of homes that are available and the cards are in your hands when negotiating the deal. With mortgage rates as low as they are, by purchasing a home right now you may be paying the same monthly mortgage payment compared to waiting for the real estate market to hit rock bottom while mortgage rates increase. 
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Pleasant Hill, CA
Insurance and Real Estate Broker
Cherry Creek Mortgage - West Bend, WI
FHA & Reverse Mortgage Expert
very good advice we always give 2 or 3 different options... the customers ask a lot of questions and you build a strong relationship...
Rick
Feb 21, 2008 12:47 AM
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Home Buying
about 11 years ago
Local MN mortgage broker with access to over 40 mortgage lenders to help you find the best MN mortgage for your needs.
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