Mortgage Rate Mania

My first mortgage in 1981 was 18.5%. Three years later I thought I was getting a good deal when I refinanced at 12.5%. That’s right – 12.5% was a good deal.

Now picture this – December 29th, 2011. The New York Times runs an article titled, “How Low Can Rates Go?” At the time, rates for a 30-year mortgage were pegged at 4.32%.  

Flash forward six months later to week ending 6/1/12, and the 30-year fixed-rate mortgage averaged 3.75%, down from 3.78% the previous week and 4.55% a year earlier (15 year rates are at 2.87%, and 10 year rates are at about 2.75%).

So the big question many people are still asking is this: How much lower will it go now?

My answer? It doesn’t matter!

The fact is, if you are waiting on mortgage rates to bottom out before making a move to refinance or buy a home you are running the risk of missing the boat altogether. We may never see these rates for a long time – if ever. Whether you lock in at 3.75% or 3.70%, you have a good deal and a great opportunity to save money in the long run.

Back in December, Frank E. Nothaft, the chief economist at Freddie Mac, said:

“Rates are very much at the bottom. But… they may start inching up in the second half of the year. If you’re planning to refinance, do it sooner rather than later.”

The second half of the year is upon us and "sooner" is now. Take a moment to consider this opportunity so you don’t regret it later.  

In the words of Crazy Eddie, these interest rates are so low they are practically in-sane.