I know that I have informed you that the first-time homebuyer tax credit was extended and expanded to include existing homeowners. I'm sure you also know that interest rates are at an all-time low. Interest rates are currently hanging in there below five percent fixed for most scenarios. Something you may not know is that the Federal Reserve has already bought over $1 trillion in mortgage-backed securities of the announced $1.25 trillion total they agreed to buy earlier this year. When the Fed mortgage market support ends, rates will probably rise quickly. My advice to you is to make hay while the rates shine. Whether buying a new home or refinancing your existing mortgage, NOW is the time!
The following example bears out the fact that waiting will do nothing more than cost you money. The principal and interest payment on a $300,000 mortgage at a 4.75% interest rate and amortized over 30 years is $1,564.94. If interest rates were to move up to 6.0%, the payment on that same $300,000 mortgage would be $1,798.65. Thus, a buyer or borrower who is currently qualified for a $300,000 loan with interest at 4.75% would only be able to borrow or refinance approximately $255,000. The slight increase in interest rate from 4.75% to 6.0% decreases your buying or refinancing qualifications by $45,000. If interest rates were to increase to 7.0%, a buyer or borrower would have their qualifications reduced by more than $65,000. They lose 22% of their buying power if they wait...that's a BUNCH!
Jumbo loans, those in excess of $417,000, are currently at slightly over 6.0% interest and are much more difficult to qualify for than a conforming conventional, FHA or VA loan.
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