Mortgage Interest Rates will go LOWER !!! Interest rates will go lower !!!

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Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

 

confusion about mortgage rates

 

 

 

Mortgage interest rates will go much lower in less than a month. Wait, interest rates will go higher in a month. No, wait, interest rates will go much higher by the end of the year, possibly to double digits.

So, are you confused?  Where are you getting your information from? I have heard both from the news media and the government that they will lower rates. We heard back in November 2008 that rates would go to 4.5%. But you can go to 4.5% now, but depending on the loan amount, the LTV, and your credit scores, it could cost you anywhere from 3 to 4 points to get that rate.

 

mortgage interest rates

 

 

 

Well, thanks to the new stimulus bill, there is major talk about lowering the interest rates. And some reports are stating as low as 4.0%. Wow, that would be awesome, or would it?

Okay, let's clear the air. In my opinion, lower rates will hurt us than help us. I have my reasons, yet I am not the only one that thinks this. Please click on this link to hear some scary news. Yahoo Finance  It's around the 3:59 minute mark to 5:20, that is the part about interest rates. And I wrote about some of this here... please read : I need my quick fix, please pass me that 4.5% interest rate  And I think this is very important, which was talked about in the video.  Inflation vs deflation. Is it criminal?

 

 

 

 

lower interest rates

 

So what is the argument by some that lower interest rates are good? It lowers your payment. In my opinion, how many of you would agree that it would just allow more people to buy a bigger home instead?  Instead of saving that money monthly. And if that was the case, then it would just help those to refinance. But wait, anyone that had interest rates like 7.25 percent and or higher, would have refinanced even 2 months ago, when rates were in the low 6's to high 5's, if it made sense. Ah, those that couldn't before, probably can't now, because of bad credit or no equity in the home.  So this helps those that bought in the last year with interest rates in the 6's.   hhhhhmmmm  Interesting thoughts....

What do you say?  Thoughts?

 

And keep this in mind, don't you have a comfortable payment in your mind?  If not, your loan officer should be asking you this question and not dwell on what you can afford. So, back to the payment. If so, and that payment doesn't change, but a lower interest rate?  You just buy a bigger house and not save that extra money. Yes, there are some arguments on the other side of this fence, but that is for another post.

 

 

 

Conclusion :  So let's think about all of this?  Are you a true blue gambler?  You want to buy a house now, you can afford it, but you decide to wait a month, because you heard that rates will come down even more. What happens if they don't come down? 

You can refinance to a 5% fixed rate with 1 point and that would save you around $200 a month. And you plan to be in the house for over 5 years. But wait, you don't want to do it now because rates are coming down. The media and government said so. But what happens if they don't?

 

Food for thought....  We all have heard that the government are buying up MBS's, which are mortgage backed securities. But what we don't know are what coupons they are buying. Are they sinking our money into the 4.5% coupons?  The 6.0% coupon? How about the 6.5% coupon. The federal government doesn't set rates for mortgages. Interest Rates can change daily due to the different market changes. My thought on that?  Even if the gov't bought the MBS's, which would lower rates, how long would the rates stay low? We have already been through this a few times. Rates would stay low for a day or two and then climb back up.

 

My advice?  Stop listening to the media, politicians, gov't, and those in the mortgage industry that will tell you to float your rate. If you can refinance now and it makes sense, do it.  If you had planned on buying, that you can afford it, and that you feel positive about it,.... then do it. Don't wait for false hope, it could bite you in the arse. Talk to a mortgage professional about this, to see what your options are now. But if someone tells you to float now or wait later?  You be the judge of that when or if that day comes. Do you want to take that gamble?

 

 

On a side note, here is a post written by Colleen Craig - Giving those of us that missed this information the other day..

Economic Stimulus plan helping the ones that actually paid their mortgage?

 

And a post by Robert Ashby, why he thinks rates will go up and soon. I fully agree with this and have stated that rates will be in the 7's and 8's by the end of the year. I think this is spot on ... Please read :

Inflation: Hidden Giant Waiting to Drive Mortgage Rates Higher?

 

 

 

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For more information about the 2008-2009 Tax Credit for First Time Homebuyers : 2008 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!


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Re-Blogged 1 time:

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  1. Tim and Pam Cash 02/21/2009 06:29 AM
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Rainmaker
2,471,636
Rebecca Gaujot, Realtor®
Vision Quest Realty - Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Yes, we need to stop listening to the media. But, this market has slowed not that people are waiting for rates to drop, but people are losing their jobs, they are afraid to spend money...or just don't have it. 

Feb 21, 2009 05:43 AM #42
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Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Nice feature, my irish Homeboy.  Get the dice out and roll em.  That's the only thing that's for sure.  1 truth is that the mortgage rates, when they hit 4.75% were the lowest since 1971.  That's the bottom line fact.  We're only about 25-50 basis points away.  It's more realistic that rates will go up than down.  Needless to say, homebuyers need to act now and not wait for a lower rate.  Odds are against them in the waiting game.  If the rates do drop, then we can re-negotiate, but if they go up, then the homebuyer loses.  Great post dude.

Feb 21, 2009 05:55 AM #43
Rainer
179,139
Mark MacKenzie
Phoenix, AZ

Pigs get fat, hogs get slaughtered.

I think that is the term that is most appropriate about mortgage rates.

5% looks pretty damn good to me.

Feb 21, 2009 06:08 AM #44
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Tim and Pam Cash
Crye-Leike (Sango) - Clarksville, TN
Real Estate Professionals - Clarksville TN

Jeff, I won't argue your points - they are well taken.  While I was an advocate of a lower fixed rate - I am afraid with all the irresponsible bailouts - doing so now would only worsen the economy.

Feb 21, 2009 06:28 AM #45
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Julie Dumaine-Russell
RE/MAX Alliance - Branford, CT

Jeff - What a great article and congrats on the feature!  I totally agree with you that buyers who are still sitting on the fence waiting for either lower rates or lower prices really are not buyers.  With the low rates out there right now along with the unbelievable opportunity to buy a home at prices that we haven't seen in years, what more could a buyer ask for?  When I speak to buyers today my goal is that they are comfortable with the monthly payment they are looking for versus how much they've been approved for or what the interest rate is.

Feb 21, 2009 06:45 AM #46
Rainer
10,831
Eric Meruelo
Springfield, MO
Vice President / Sr. Loan Officer

Hi Jeff great blof and some grat points !

Feb 21, 2009 06:59 AM #47
Anonymous
Joel Barth

Best rates in 40+ years but real estate is suppose to GO UP!!!!!  Hopefully, we will see some stability soon.  Doesn't matter how cheap the money is if you are going to be upside down in a year.  Best Buyer's Market ever in my opinion though...of course we haven't seen the bottem yet!

Feb 21, 2009 07:01 AM #48
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

REBECCA.... . that's been part of my point in the comments and in other blogs. Lower rates aren't going to make a mad rush in buying homes, because people don't have the money to buy. You can call a lot of this hype smoke and mirrors, money wasted, to make people think that it would be better to buy. But again, the gov't forgot one main ingredient, CASH...  lol  Sure, there is the $8,000 tax credit, but you don't get that until after you buy your home.  thanks

LARRY..... .  homeboy?  Irish?  I am Italian... lol  Okay, so you got me.. In any case,  What about when rates hit 4.5% and that you can still get 4.5%, but it will cost some decent upfront monies.  But we both agree, rates are more likely to go up and for serious homebuyers, they need to buy now, not just wait and hope.... that could cost them thousands.  And thanks for the compliment.

MARK.... . maybe I should just have written that in my blog post... lol  right?  And yes, 5% looks damn attractive. But for the greedy and the ignorant, they want better or to gamble.

TIM & PAM..... .  Go ahead, argue.. lol  Seriously, sure, low rates can be good, but if you study the numbers and look at our current status of our economy, this would be a very short, quick fix, that would hurt us more in the near future. That is my opinion and overall, will hurt us more than help us.  And you make an excellent point, with all of these bailouts, people are just thinking... hey, if it goes bad, I will get bailed out or just walk away.  Very sad, yet so true.  thanks

 

Feb 21, 2009 08:01 AM #49
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
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DONNA..... . it comes down to educating the borrowers.  Just as you mentioned, the better loan officer will ask the borrower what payment that they are comfortable. And not be the type of loan officer that pushes the borrowers qualification without even talking about what they are comfortable with. I had a few loan officers on AR attack me because of that theory per se. One of the loan officer's defense was that if I asked a client that question in the beginning, that they should not walk, but run away. That has to be some of the worst advice that I have ever heard. And this person calls themselves a loan officer?  rut row.  You give people a rope, they will hang themselves... and say, hey, we can make that higher payment, knowing that they really can't, but talked themselves into it.

ERIC..... .  thank you very much for those polite compliments.

JOEL..... .  I am trying to follow you. Real estate is suppose to go up? Do you mean in values?  And then to say, it doesn't matter how cheap the money is if you are going to be upside down in a year? Many of us know that real estate is local, but in many areas across the U.S., real estate is now stable. In several areas, the market never took a hit. And I am sure that there will be a few areas that will take a hit, but I don't see it that much anymore.  And then you say, "of course we haven't seen bottom as of yet"...  as in real estate prices?  I think we have in most areas... not all...  but I am talking about the U.S.  Sure, if we take out 70% of California, most of Florida, half of Michigan, and half of Ohio, it still leaves for more than less... thanks

 

Feb 21, 2009 08:02 AM #50
Rainer
1,358
Beverly Jeppesen
Beverly Jeppesen - Ocala, FL

Remember the days when people bought homes because they got married, had children, needed more room, or wanted to move away from mom and dad?  It didn't matter that the interest rates were in the double digits.  The decision to buy a home should not be based on what the current interest rates are, but on the needs of the individual or family.

I agree with the "My Advice" section in your post.  If someone is ready to buy...do it.  Do not wait for the media or the government to give the go-ahead.

Feb 21, 2009 10:14 AM #51
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The Somers Team
The Somers Team at RE/MAX Access - Philadelphia, PA
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Jeff - Great post !  The bottom line is if one can refi or is interested in purchasing, they should just do it !  These programs that are being talked about... who knows what will come of them.  The "stimulus package" basically put some homebuilders out of business and banks are not too far behind them at this rate.  Hopefully we get some clarity next week otherwise we might see Dow 6000 !  Either way, it is an excellent time for buyers to take advantage of all the opportunity available to them.  I just with the tax credit would have been available to ALL buyers.  The first time homebuyers already have enough stimulus to play with !!!  What about some love to investors as well ?  : )

Sorry I missed you the other night in Center City Philadelphia - Friday was a rough day for me as well but am back today !!  I heard it was a lot of fun.  I am glad Stephanie went : )  ~ Chris

Feb 21, 2009 10:47 AM #52
Rainmaker
394,850
Elizabeth Cooper-Golden
Huntsville Alabama Real Estate, (@ Homes Realty Group) - Huntsville, AL
Huntsville AL MLS

So many great comments here already.  I'm a fence sitter on refinancing, I must admit.  I keep thinking they will go lower as well.  I know, shame on me!  I certainly tell my buyers now is the time. 

I am SO lucky to be selling in Huntsville.  With 80% of my buyers being Engineers, they are not into the emotional purchase.  It must make sense.  Most of my buyers buy WELL within their means and that is a good feeling to have.  Most will plunk the savings into their bank. 

I agree that we all need to stop listening to the media hype.  It makes me crazy, really.  On one hand, if the rates are low low low, maybe our inventory will be soaked up. On the other hand, it weakens our dollar.  Who knows?  Certainly not me.  That's why your the mortgage guy :)  Just let me keep selling homes and you figure all this hard stuff out, lol.   *mwa*!

Feb 21, 2009 11:35 AM #53
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Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I think the best case for keeping rates low has nothing to do with real estate, but rather making money cheap for the successful businesses to expand.. and keep the interest payment on the out of control national debt down to merely unreasonable rather than oh-my-God insane. 

Feb 21, 2009 11:40 AM #54
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
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Jeff - "If you can refinance now and it makes sense, do it."  Now that makes sense to me.  And as Chris mentions in his comment above, they really need to show investors some love.  Opening up credit to Seasoned Real Estate Investors who have made a living buying, selling, and holding property is crucial in my estimation.  I don't just hope folks read this post; I hope they take it to heart.  Off to read Colleen's post.

Feb 21, 2009 11:51 AM #55
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
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BEVERLY..... . bingo... and that's how it should be. It's not like buying a $1,000 tv that drops in price to $800, and say... "gee, we can save $200"... even if you have been thinking about it. It shouldn't be an impalse because the gov't says that we are going to lower rates to help you buy. It doesn't really work that way. Yes, it will help some and get some off the fence, but it won't be a landslide. It takes thought and preparation to buy a home, if done properly.  thanks

CHRIS & STEPHANIE.... . exactly, who knows what will become of the programs that have been mentioned. And Dow 6000?  rut row, I hope not...  but yes, it's a great time to buy now. And about the other night, no problem. I am glad that Stephanie could make it, just sorry that I didn't get to talk to her much. Maybe we can meet up sometime soon. I am actually heading into the city now. talk later and thanks for the compliment.

ELIZABETH..... .  fence sitter... tisk, tisk.... and why?  What rate do you have?  And in regards to the types of borrowers that you have, yes, you do seem to be lucky in that department. Overall, many of us seem to agree on this topic and what has taken place.  thanks and thanks for the kind words.

LANE.... . I guess what should be mentioned then is ... what kind of rates are we talking about. I truly believe that mortgage interest rates, staying this low or going lower, will hurt us. Savings rates for other things, could be better. But it does need to be clarified on many different levels. The national debt is what scares me the most... but has it just become a number now?  lol

JASON SARDI... . I make sense?  cool.  Did I the other night?  lol  I think a lot of this makes sense and the fact that we need to stop screaming about lowering the rates, unless those same people understand money and what it can do to us in the near future.  thanks and I hope you enjoy Colleen's post.

 

Feb 21, 2009 12:06 PM #56
Rainmaker
325,771
Esko Kiuru
Bethesda, MD

Jeff,

Mortgage interest rate prediction is for those few who have found a working crystal ball. Anyone about to refinance or buy ought to do so now since rates are as attractive as can be.

Feb 21, 2009 01:57 PM #57
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

ESKO.... . even those that think they have found a crystal ball, are just taking educated guesses.  But if you follow the many signs, pointing to higher rates, that is a good bet that it will happen. They haven't gone up in months, because the gov't is buying them down. If they didn't interfere, rates would be much higher now, close to 7%. That's my opinion and there are others that think the same.  And yes, they should do something now and not wait. thanks

 

Feb 22, 2009 02:05 PM #58
Rainmaker
101,071
Robert D. Ashby
Visual Approach Aerial Photography (Visual Approach Photography) - Plantation, FL
Turning Visions into Photographs (and Videos)

Jeff,

Sorry I don't have time to read all of the comments, so I may repeat thinsg here.  Oh well, people need to realize payment matters more than the rate and the payment one "qualifies" for may be more than they can afford.  Rates are darn near irrelevant in the overall scheme of things, especially when you integrate the mortgage into an overall financial plan.

The bottom line is whether or not rates do actually drop (which I highly doubt), the cost of waiting versus the ptoential savings equation will be the true comparison.  Do you take advantage of the low rates now?  Or do you waste precious money that could be saved now in the "hopes" of lower rates in the future? 

On a side note, we do know what the Fed buys on a weekly basis and even though they have shifted their purchases to lower coupon bonds, they have failed to break resistacne thus far and all they have successfully done is keep rates steady, and that may not last much longer.

PS - Thanks for the mention.

Feb 24, 2009 02:54 AM #59
Rainer
17,498
Lynn Meldrum
Lynn Meldrum with Verico Canada First Mortgage - Calgary, AB

In canada the government has lowered the interest rates and people are still purchasing but not with the same urgency that it was 2 years ago when house prices almost doubled overnight, It's totally a buyers Market here in Calgary AB

Mar 09, 2009 11:07 AM #60
Rainer
8,963
Amy Anthony-Coile
WR Starkey -Classic City Team - Athens, GA

Great blog- good points! If I had $1oo for every client that I have "waiting on 4.5% on 30 year fixed", I could retire!  Seriously - since when does 4.875% on 30 year fixed money have the plague?  THat is the way people act!  Unbelievable. :)

Mar 14, 2009 02:29 PM #61
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