Rates are at their lowest and government is thinking of even lowering rates to 4.5%. Currently 30 year fixed stand at 5.09%, so should I refinance?
The answer is yes. What makes the difference is your credit score. Even with 700 billion bailout help banks are not doing their best to help all customers who wants to refinance. Only good credit customers can take advantage of low rates.
So let’s look at the future for a while. As of this week 30 year fixed mortgage rates are at their lowest levels and in some states mortgage brokers reported as low as 4.875% interest rates. As long as you have an equity and good credit score you are able to take advantage of this rate.
What may happen next might shock you. These rates may not last too long! Because government extended its hand to banks, someone needs to pay back that 700 billion loan. Government approached this by buying a stocks from these banks in order to give them financing. Banks should eventually increase their equity, make money and their stocks should move upward. That is the goal so far.
In order to show profits, banks need to reduce their expenses and other costs to generate revenue. In order to do that, first they need to fix their guidelines. And guidelines comes to only give loans or mortgage to consumers who actually are able to repay them. This limits on who may get that next loan.
Once a new loan or mortgage is provided to a consumer, these loans are packaged together and sold to Wall Street.
At the same time banks need to make money on these loans and mortgages. That is why they charge interest rates. With low interest rates, banks make lower profit and eventually banks will be leveling off and increasing these interest rates to bring higher profits.
Next, is your credit. Yes, your credit as banks rely on credit heavily at this time. Any slight difference in your credit card balance or any loans you might have, can turn against you later on.
If you keep waiting for the next lower rate, you may be out of luck. Let’s look at the idea from government to propose mortgage rates at 4.5%.
A great idea for anyone to have 30 year fixed at 4.5%, but again banks profit is shrinking. In order to make this happen, what government may do is to offer this rate only to new homebuyers. The advantage of this low rate is that more and more buyers will come to market and purchase already discounted homes with even better interest rate and thus increasing property values.
Fixing real estate market is the key to recovery. If banks will offer this rate to any home buyer, they will have to raise their fees. If their fees are higher, you will be getting the same deal today.
So far there is no positive news when this new 4.5% interest rate may come, however; low rates are here today and you should not wait for another opportunity like this.
Author Resource:-
Susan Duey represents RateTake Mortgage marketplace. RateTake matches consumers with multiple lenders offering low mortgage rate quotes. Get your free Mortgage Rate Refinance Quote.
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