Interest rates have been increasing since early in November 2010 and most of what we have seen is due to an overreaction to any piece of economic news. It actually makes me laugh that some of the bond traders truly believe that we are in the midst of an economic recovery. REALLY? Was I asleep when the economy recovered? I have been in the mortgage industry for over 20 years and when it comes to interest rates I know one thing. The markets will overreact to everything. When interest rates were going down they went down fast because the traders reacted to it. Now that interest rates are climbing they seem to be going up every day because the traders are overreacting.
If you are thinking of refinancing or purchasing a new home should you hold off and wait for interest rates to get better? If you are purchasing you should not wait! The market is coming off a few slow months and sellers are eager to negotiate. Get a loan with no points and refinance to a lower interest rate when interest rates go lower. A good lender will always be able to offer you loans with no points and no fees when you refinance (some restrictions apply.)
If you are considering a refinance to lower your interest rate, then you should refinance when it makes sense. If your interest rate is currently at 5.25% today, and you can lower your interest rate to 4.875% with no points and no fees then you should do it! When interest rates drop down to 4.50% then you should refinance again. If interest rates hit 4.250% with no points and no fees then you should refinance again!
There is no reason to wait for the lowest interest rate when you can refinance with no points and no closing costs. I have helped thousands of people refinance their homes to lower interest rates over the years and I always advise them to do the no closing cost loans.
Please let me know if you have any questions about interest rates, housing or what we can expect in 2011.
Augusta Financial - President
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