b:include data='blog' name='all-head-content'/> 2 3 Eugene Mortgage and Real Estate News: Mortgage Interest Rates

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Tuesday, January 12, 2010

Mortgage Interest Rates


I spent about an hour last night on the phone with a client talking about various options he has for refinancing his home. He of course asked everyone's favorite questions; "so what are rates going to do?" I hear this question all of the time, and not just from consumers, but also from industry professionals. My reply, "well they are either going to go up, down, or stay the same; I guarantee it!" The truth of the matter is that all anyone can give is an educated guess. Look with extreme suspicion on any lender that tells you he knows what the market is going to do! After all, if he truly had "the" answer, he would managing a bond fund on Wall Street for a seven figure income, not working loans for a bank or mortgage company.
The follow up question is always the same from clients: "should I float the rate or lock it in?" My advice is always the same. It depends on how much risk you are willing to expose yourself too. Floating in essence is a gamble. I asked this client, if rates went up .875% tomorrow would the loan save you any money? No? Then you should maybe consider locking. I am a believer in worst case scenarios. I think that's because after 14 years, I have too many of them. I tend to take a more conservative approach and try to always minimize my exposure to risk. Why not take the $382.00 a month savings NOW? Are you willing to risk $382.oo per month savings in hopes of getting $397.00? Some people are good with that, but I personally am not.

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