As human beings, we crave certainty, consistency, something we can really count on or believe in. It's comforting, it's consoling, and it's completely natural. But it's also extremely fragile, and always the first casualty of turmoil, especially in the financial markets.
In 2008, one could argue that the biggest market movers were not just the credit crunch or a pending global recession. It was fear, a sweeping lack of confidence that suddenly gripped everyone, from major financial companies and individual investors, to consumers and governments alike. The result was not only the unprecedented financial turmoil that we're not going to discuss in this article, but also an amazing opportunity for those who aren't afraid to face that fear as the real estate and mortgage markets begin to turn - and they will turn. Perhaps they already have.
For instance, mortgage rates are currently the lowest they've been in a generation, and home prices have dropped significantly in many areas. For new buyers and homeowners looking to save on monthly payments, this is great news. Homes you might not have been able to afford just 2 or 3 years ago are now well within your reach at a rate that makes much more sense than renting, in many instances. What's more, the Federal Reserve, the Treasury Department, and even the Federal Deposit Insurance Corporation (FDIC) are using all of their tools to address the ailing economy, which many experts believe could lead to even lower rates in the near future.
For homeowners with enough equity, this means now may be the time to lock in a low rate. At the time of the writing of this article, the Mortgage Bankers Association reported that mortgage applications jumped 2.9 percent in one week in December, 77% of which were refinances with an average interest rate of 5.18% for a 30-year fixed and an average rate of 4.93% for a 15-year fixed mortgage.
If the experts are wrong and rates increase, you made a great deal. If the experts are right and rates continue to drop, just ask your mortgage professional about a "no closing cost loan". This type of loan allows borrowers to lock in today's low rate and to refinance again if the rates fall further. Just make sure there's no prepayment penalty if you're not going to stay in the home long enough to recoup your investment.
Comments(0)