Can It Be NOW is a Good Time for a Mortgage?
Friday, January 15th, 2010 | Real Estate
Can It Be NOW is a Good Time for a Mortgage?
Buying a home
Every now and then, the economy produces a time when it is a good idea to refinance your
mortgage or purchase a home. For many, that time is now.
Low interest rates are bringing first time homebuyers out by the score and that’s driving the
resale market. Those of you on variable rates or coming off of fixed rates can benefit, too.
Today’s prime is at 2.25% compared to last year’s prime at 4.75%, or two years ago at 6.25%.
Conventional wisdom would say that now’s the time to take the money and run by lowering your payments and pocketing some cash. Instead, you could decide to keep the payments the same, and assuming nothing has changed for you in that you could afford the payments two years ago and you can still afford them today, you could shave serious time off the term of your mortgage.
Or you could still lower your payments and take some money for other things. The current
circumstances allow you the choice. Ironically, this is all a result of the recession.
In fact, homeowners facing resets on their adjustable rate mortgages or hoping to refinance into less burdensome loans may be the biggest beneficiaries of the recession. As many as two million homeowners may be facing ARM resets this year and declining interest rates hold out the hope of refinancing to an affordable fixed rate. If you bought your house with an adjustable rate mortgage, as many did, a few years back, then you want to be sure to note when it changes from a fixed rate mortgage to the adjustable rate portion. For many of you, it could be getting real close, if that time has not already occurred. Refinancing could give you a stable payment and a new interest rate, too.
While it’s impossible to predict what will happen to rates for the rest of 2009, and beyond, many mortgage professionals are advising clients to act now. Right now is the time to consider what you need to accomplish. If cash flow is a concern, why wait? Increase your cash flow by refinancing and have one less concern. With lower rates, more people are able to qualify for refinancing and more people who were left out from buying homes before will be able to do so now.
Contributor:
Ted Canto, Sr. Mortgage Consultant
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