I received some interesting news via our President of Coldwell Banker this morning and thought this excerpt might be interesting to you;
As I am sure you are aware, the Senate will be voting on the Economic Stimulus Plan very shortly. Our Government Affairs staff in Washington D.C. has just informed us that a Senate vote on the Economic Stimulus Plan could occur as early as tomorrow, February 6. We have also been advised that special Amendment #353 to the Plan, a provision for the Federal Government to buy-down mortgage rates to 4.5% or less for a 30-year fixed rate loan for the purchase of a primary residence, will be voted on as early as TODAY.
So if this rings true...you should have opportunity. I'd pay close attention to the news amd all the details of these stimulus programs so you get the full scenario the next couple of days! The rates are tremendous regardless and you really should get rolling on an application real soon as who knows what kind of restraints will be put on these buy down provisions. In essence will it cover Refinancing or is this just for new purchases? Always a good idea to search out all the facts and take the most calculated move that works for you and your scenario.
When the rates dip into the 'below 5' range, many LO's become inundated and are not able to handle all the request from potential borrowers. They have to tend to those who are committed to them first (often with a forward lock agreement) and will contact "rate shoppers" next.
Another factor is that the actual banks/lenders will become too busy to handle the rates and they will either shut down their lock desk or "artifically" increase rates in order to slow down new locks.
The industry has fewer people to handle all the request...last week, I heard a stat from the Washington Association of Mortgage Professionals that we have gone from 14,000 licensed loan originators in Washington State to 4,000 in two years!
Be sure to consider what your current rate is, what rate you need to break even on closing costs and how long you plan to retain your current home.
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Rates have certainly ticked up the last couple weeks and those who were hesitant to pull the trigger missed the boat somewhat. You can still get below 5%, but not without paying points. If 5% is your psychological threshold, then paying points does have some value. Pretty soon my prediction is that 0 point loans will be a thing of the past.
The thing is, no lender "wants" to lend out money at below 5%, especially to people who are paying 6% and who would never default on the loan. This decrease in interest rates are a benefit to lenders when they can use the rates to help someone keep from defaulting or to help someone buy one of their foreclosures to take a problem off of their hands. As a result, refinances are priced higher, and whenever rates get too low and the market is flooded with applications that acts to drive up rates, regardless of what the govt does to try and force them down.
Work with a trusted lender to set up a game plan. Like Seattle Lady said, get a file in process with someone with the idea of locking in a rate if and when they drop back down. Otherwise, you're just another person on a long list of people most lenders are hoping to call if that happens, and you may miss the boat again
Hurry up and tell me, off of the top of your head, how much more you save by waiting for the magic 4's instead of locking the rates available today? How much per month? Over the life of the loan?
If you're like most, you may not know. If you do know, and you've determined that you must wait for something below 5%, well, you're probably not too worried about waiting longer. You figured out early on that your refinance would only make sense at x%, and you know that if we don't arrive at that destination it is more financially beneficial to stay where you are.
My point is this: If you are market timing, you will likely lose more opportunities than you realize. If, on the other hand, you and your loan consultant have defined an "opportunity zone" or range of rates and payments that make your refi financially viable, you need to carefully weigh what's available right now and consider taking action. You touched on the key issue --- house value. In this market, 4.5%, if it ever materializes, does you no good unless your appraisal supports it.
Teddy Roosevelt once said, "In any time of decision, the best thing you can do is the right thing. The next best thing is the wrong thing. And the worst thing is nothing." If you're indeed at a time of decision, seek out some good advice and make it happen.
Let me know if I can help.