My very best guess regarding both housing prices and interest rates comes from my crystal ball. While my timing may not be perfect, I am betting that we are near a bottom in both housing prices and mortgage interest rates. My crystal ball is telling me that while housing may not rebound quickly, mortgage interest rates may start to rise in the summer and into the fall.
If you have an adjustable rate mortgage...,
or an interest rate that is higher than current rates, refinancing to a lower fixed rate mortgage might save you thousands of dollars in interest payments. I do not want you to refinance your home so you can take money out and buy a new TV or go on a vacation! In my opinion, the principal reason to refinance is to reduce the amount of interest that you will pay over the life of the mortgage.When it comes to purchasing a home, I think it pays to seek out an experienced realtor and even consider utilizing a real estate attorney. Be certain you can afford the payments, even if one spouse loses a job or chooses to stay home with the children. Don’t underestimate the old truisms of “ location, location, location” and buying the smaller home in a nicer neighborhood.
You need to be financially literate and understand both processes. Refinancing a mortgage is easily done but it is a complicated transaction. Recent history is riddled with people obtaining mortgages without understanding the consequences. Ditto for buying a home. The current surge in foreclosure rates illustrates my point. I recommend that you start at A Consumer’s Guide to Mortgage Refinancing and the website is http://www.federalreserve.gov/pubs/refinancings/default.htm
Please brew some coffee and thoroughly read the material. If you are purchasing a home take a look at http://portal.hud.gov/portal/page/portal/hudOnce you have done your homework, consult with your local credit union lender, banker and a mortgage broker. You may want to ask your financial advisor, CPA, real estate agent, attorney and friends for referrals.
Please be absolutely certain that you understand the entire process, reviewed the good faith estimate and never, ever be embarrassed to ask questions. This is your money, your home, your responsibility and your reputation! THERE ARE NO STUPID QUESTIONS! If you feel like the lender is being vague or not answering your questions completely, go elsewhere. Don’t feel pushed or forced into signing anything.I sense time is running out to refinance or to take advantage of the current interest rate environment. I also believe that now is a very attractive time to look at a primary residence. You may notice that I have not mentioned investing in a “investment” house at this time. That is because I do not believe that the price of real estate will rebound quickly and if you are planning to rent it – that is an entirely different topic. (More posts by Chris linked at the end of this post.)
Christopher J. Conner
Certified Financial Planner TM
Certified Fund Specialist
North Florida Wealth Advisors
5200 W. Newberry Road E-7
Gainesville, Florida 32607
352-225-3132 (Fax) 352-225-3784
Advisory Services offered through Jonathan Roberts Advisory Group.
Securities offered through J.W. Cole Financial, Member FINRA/SIPC.
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More Posts by Chris:Having "The Talk" with your Parents