As a loan officer, mortgage interest rates are central to my daily business. In fact, the first thing I do each morning is check in with a number of different sources to get an idea of what can be expected in the market for the day and week ahead. Over the course of the past six weeks I've been disappointed nearly every morning as interest rates have continued to rise. Over the course of that time we have seen average interest rates increase by about 0.75%. That may not seem like much to the average observer but 0.75% on a 30 year fixed $300,000 mortgage is equal to $127 per month or $45,720 over the course of a 30 year loan!
It is not uncommon that I will quote someone an interest rate for a refinance and they will take some time to think about whether or not they want to pursue the new loan. It only seems natural right? The market can go up or down, what if it goes down? Unfortunately, it does not look as if the rates are going to go back down to the historic lows we have been enjoying for the past year. In a recent interview, Fannie Mae chief economist Doug Duncan stated this point. He did indicate that he thinks they may settle soon but nothing is guaranteed. One more thing that Doug said that stuck with me was "Can you afford to be a market speculator?" This was in response to people asking him if they should lock or wait. His advice stated that you should lock if the new payment is within your budget as it is unlikely that rates will go down.
So, if any of you out there have been putting off refinancing, you should probably get started. Even if you do decide that you would like to wait on rates, it is helpful for the loan officer to get your paperwork together so they are able to lock immediately when rates hit the mark you are looking for. I know it seems like a daunting process but a good loan officer will do everything they can to make it easy for you. If you do find yourself confused or overwhelmed then call a few more lenders and make sure that you are comfortable with the loan officer you select.
Here is the link to the interview with Doug Duncan along with an article.
Fannie Mae Chief Economist Interview
Happy Thursday!
