Mortgage Rates Drop

Finally some good news among the endless news stories about the Financial Crisis. Conventional fixed rates dropped sharply after the Fed announced plans to purchase up to $600 billion of debt backed by Fannie Mae and others. This news caused mortgage rates to drop around .75% for a 30-year fixed 0 point loan. So when does it make sense to refinance? If your rate is 6.00% or above you should consider the benefits of refinancing. Also, if you have an adjustable rate mortgage or need cash for debt consolidation, college education or home improvement, now may be a good time. What about the costs to refinance? If the cost to refinance is zero, as it is with a true no-cost refinance program, than refinancing, even if you recently purchased your home, makes sense as long as the new rate is lower than your current rate. Furthermore, if rates drop after you close, you can simply refinance again with no closing costs. The only downside of the no cost refinance is that you will pay a slightly higher rate than if you paid closing costs to refinance.