I have gotten a lot of questions about this in the past week after news came out that the Fed would buy mortgage debt at a rate that would allow lenders to offer buyers a 4.5% interest rate on a 30 year fixed rate mortgage. On December 4th, the Wall Street Journal reported:
The Treasury Department is considering a plan to revitalize the U.S. home market that would push down interest rates for loans to purchase a home, according to people familiar with the matter.
The plan, which is in the development stage, would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5%, more than a full point lower than prevailing rates for standard 30-year fixed-rate mortgages.
Several people have asked me if now is the time to refinance. Here is the deal.... this was proposed by a lobbyist and at this point is simply that: a proposal. The lenders I have spoken with do not seem to think it will actually happen, but you never know! In the meantime, 30 year fixed rates are in the mid 5% range for people with top notch credit so if you are planning on being in your home for more than 2 years and your rate is higher (or you have an ARM that is about to end), it may make sense to refinance. If you want more information, let me know and I will be happy to put you in touch with one of the very capable lenders I work with. And don't worry, if the Fed does decide to move forward with this 4.5% plan, I will be sure to let you know!
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