Mortgage Interest Rates
Mortgage interest rates have been rising and falling sporadically
during the past 20 years. The movement of mortgage interest rates
is inversely proportional to the status of the economy. As a general
rule, mortgage interest rates are low when economy is good. When economy
goes down, the feds would jack up mortgage interest rates in an effort
to stimulate the economy.
Only last month, mortgage interest rates have jumped more than a point.
This increase in mortgage interest rates has significantly reduced
the number of people willing to refinance their homes.
According to experts, refinancing only makes sense if the mortgage
interest rates are low. And with this recent rise of mortgage interest
rates, it is only logical that people are balking at the idea of re-mortgages.
The total increase of mortgage interest rates was over 6 per cent
at the end of last week. Although this mortgage interest rate is the
highest so far this year, it is still lower than where it was a year
ago. Last year, the mortgage interest rates of 30-year fixed rate
loans were averaging nearly 6.5 per cent.
To refinance or not to refinance?
It is understandable that some hesitation is at hand when it comes
to refinancing, especially since it has been found that mortgage interest
rates are rising. But still, it might not be too late to refinance.
If you fall into one of these categories, the apparent rise of mortgage
interest rates won’t affect your refinancing plans one bit.
try to look at your mortgage interest rate right now. Compare your
current mortgage interest rate with today’s mortgage interest rate.
If you find that today’s mortgage interest rate is one half lower
than your current mortgage interest rate, then you should probably
try to refinance. Remember that the limit to refinancing is having
a mortgage interest rate that is at least ˝ of a percent lower. Mortgage
interest rates higher than that is not worth the effort or the risk.
Aside from making comparisons with mortgage interest rates, you might
also want to ask yourself how long you plan to keep your house. If
your plan is to stay in your home for only five years or less, then
refinancing by getting a fixed rate loan might be a good idea. This
would allow you to save on your lowered mortgage rates.
"If you have money, men think you are wise, handsome, and able to sing like a bird.”
- Jewish proverb
Another option is to get an adjustable rate mortgage. If you’re planning
to stay in your home for much longer than five years and you’re willing
to risk having mortgage interest rates rise, then an adjustable rate
mortgage will enable you lower down your mortgage interest rate. Adjustable
rate mortgages usually have lower mortgage interest rates compared
to fixed rates. After the end of the first year of your adjustable
rate mortgage, your mortgage interest rates would depend on the rise
or fall of prime rates. It’s a risky business but it could allow you
to save some if you’re willing.
For example, the mortgage interest rate of 30-year fixed rate loans
is about 6.2 per cent. That’s high but you can still save something
since this is still a bit lower than last years mortgage interest
rate of 6.5 per cent. However, if you get an adjustable rate mortgage,
your savings are multiplied. An adjustable rate mortgage for five
years has a mortgage interest rate of 4.5 per cent for the first year.
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