Mortgage rates have dropped tremendously over the last few weeks and we have made many people very happy by being able to lower their payment. I belong to many economic sites that are geared to mortgage professionals and inform us of what is actually happening in the economy and with mortgage rates, this information is up to the minute. Unlike CNN or the Boston Globe, they are reporting on stories from last week or quoting a national average from closed mortgage from a week ago. The problem with is the information is old and can not really be used in anyway. Mortgage rates rose this week by 50 basis points or 1/2 percent.
A client this morning sent over a Yahoo Business report telling me where rates are and what the trend was. This is all good if you have time on your side and you are convinced that rates are dropping everyday. Rates move like the stock market, some days we are up and some days we are down. This week happens to be off because of economic news in the world which overshadows anything that is going on in the treasury markets or government plans.
I recommend that you sit down at your computer and make a spread sheet of what kind of money you would like to save monthly. Plug in a few different rates, start at 5.5%, 5.25% and go all the way down to 4.5% so you understand the difference in payments. You may find that each 1/4 is not a big difference. it is best to save at least $150 per month when refinancing and if possible look into a shorter term mortgage, you will save far more this way in interest alone. Find out the costs involved and make sure it is worth it to refi. Some clients have only 10 or less years on their mortgage and they are paying all principal now, the cost involved and the time left on the mortgage does not makes sense finacially. This refinance may cost $2000 to $3000 to accomplish. Take your savings and divide it into the costs, see how many months it takes to recoup this cost. If you are only going to be in your home for 3, 4 or even 5 years it may not be worth it. Go to my website at www.emersonlending.net and click on loan center. There you will see a calculator page that is set up for refinancing. This will truly help you with payments and interest saved over the years.
My biggest concern is at some point mortgage rates will spike up. At what point do you lock in and forget it. The government has a plan to inject $500 Billion into the the mortgage markets over the next 6 months. This will definitely will keep rates low and possible push them lower. Rates, again are like the stock market and can move several times in a day. The government could funnel there money in one day and rates drop and something happened 1/2 around the world and causes rates to go up that day. Mortgage back secuities has been the true way to track mortgage rates these days, it is almost impossible to find sites on the interent that give you this infomation without paying an arm and leg for.
Pick your local bank that you have your checkling and savings at, and track the movement of there rate. Whether it is high or low, it will still give you a good indication of the direction of mortgage rates. The trend this week happens to be up.
Most importantly, don't try to time the market, it is next to impossible. Get yourself with a lender/broker who has many options and many different banks to chose from. Find out what is your ablsoulte rate that makes your life easier, and don't say the lowest! You can always refiance today and rates continue to drop, do it again. I would just hate to see you miss this oppurtunity in our life time.
if you ever have any questions, please feel free to call me anytime or email me at bill@billnickerson.com
Sincerely,
Bill Nickerson
Mortgage Network/Emerson Lending
179 Great Road
Acton MA 01720
Wednesday, December 31, 2008
Saturday, December 20, 2008
4.5% Mortgage Rates
I am always amazed at consumers who listen to the media. When CNN reported mortgage rates were going to drop to 4.5%, it appeared the mortgage world stopped. Consumers no longer wanted their 5.25% interest rate they had locked into, CNN told them to wait. If anyone read the fine print of this latest plan from the government, you would have read in the Wall Street Journal ( a real news source for the economy) these mortgages were going to be set aside for purchase money only and it is only a plan, not even on paper yet.
Mortgage rates had dropped a full percent in the last few weeks due to large amounts of money pumped into the Mortgage Back Securities markets. This did work and we saw rates of 4.875% for an afternoon. Then, back to reality. The economy, which actually governs the markets took over. In addition to the economy, large mortgage companies like GMAC, Wells, Citi just a name a few have artificially raised their rates to slow down the mortgage application volume. You see, we can only handle so many mortgages, then if you are one of those tire kickers and just want to chat about the markets, you will get a call back next week. With all of this, mortgage rates backed off, a lot. From 4.875% Tuesday up to 5.375% in a matter of minutes. But why would believe someone who has been doing this for over 15 years, the CNN news person just learned who Ben Bernanke is and now is an expert on the markets.
I am sure we will see rates drop back down, but to try to time the market perfectly and get the lowest rate, nearly impossible. History tells us the markets react like a roller coaster, once we see an all time low interest rate, it is bound to spike back up. I admit, we are in new territory with this economy. If you are in the process of refinancing your home and you are going to save an estimated $150 per month, do you think it is wise to hold out for a possible rate drop of a 1/4 or 3/8ths just to save another 30 or 40 bucks. You may miss it all together and not even get a chance to refinance at all. Stop the greed, it is what gets most of us in trouble.
If you have any questions or comments, please feel free to e-mail me anytime at bill@billnickerson.com. I can share the many tools we use to watch mortgage rates and we are typically a full day ahead of the news media when it comes to the direction of mortgage rates. If you are getting your economic news from the evening news you are even further behind the curve.
Be careful what you wish for, if you really want to save money, cut back on your Starbucks or Dunkin Donuts coffee. That's $100 per month for the average person. Again, I am always amazed at the consumer of what they think and how they can predict the markets.
Good Luck and I wish you the best with timing the markets. Hopefully you not one of those who lost 30 to 40% in the stock market because you knew better then the rest of us.
Just another day in Mortgage Paradise!
Bill Nickerson
Vice President
Mortgage Netword
Mortgage rates had dropped a full percent in the last few weeks due to large amounts of money pumped into the Mortgage Back Securities markets. This did work and we saw rates of 4.875% for an afternoon. Then, back to reality. The economy, which actually governs the markets took over. In addition to the economy, large mortgage companies like GMAC, Wells, Citi just a name a few have artificially raised their rates to slow down the mortgage application volume. You see, we can only handle so many mortgages, then if you are one of those tire kickers and just want to chat about the markets, you will get a call back next week. With all of this, mortgage rates backed off, a lot. From 4.875% Tuesday up to 5.375% in a matter of minutes. But why would believe someone who has been doing this for over 15 years, the CNN news person just learned who Ben Bernanke is and now is an expert on the markets.
I am sure we will see rates drop back down, but to try to time the market perfectly and get the lowest rate, nearly impossible. History tells us the markets react like a roller coaster, once we see an all time low interest rate, it is bound to spike back up. I admit, we are in new territory with this economy. If you are in the process of refinancing your home and you are going to save an estimated $150 per month, do you think it is wise to hold out for a possible rate drop of a 1/4 or 3/8ths just to save another 30 or 40 bucks. You may miss it all together and not even get a chance to refinance at all. Stop the greed, it is what gets most of us in trouble.
If you have any questions or comments, please feel free to e-mail me anytime at bill@billnickerson.com. I can share the many tools we use to watch mortgage rates and we are typically a full day ahead of the news media when it comes to the direction of mortgage rates. If you are getting your economic news from the evening news you are even further behind the curve.
Be careful what you wish for, if you really want to save money, cut back on your Starbucks or Dunkin Donuts coffee. That's $100 per month for the average person. Again, I am always amazed at the consumer of what they think and how they can predict the markets.
Good Luck and I wish you the best with timing the markets. Hopefully you not one of those who lost 30 to 40% in the stock market because you knew better then the rest of us.
Just another day in Mortgage Paradise!
Bill Nickerson
Vice President
Mortgage Netword
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