When talking about mortgage rates, you have to look at two different products, with unique pricing factors.  You have the conforming loans, loans up to $417,000 today, and you have jumbo loans, any loan greater than that $417,000 number.  Conforming loans are going to have much better pricing than jumbo loans, especially in today’s tight credit market.  This is due primarily to the liquidity, they are simply much more liquid on the secondary market due to the fact that Fannie Mae and Freddie Mac buy only these types of loans.

An example of the disparity between these two types of loans; consider that a conforming 30 year fixed today may price out in the mid to high 5% range, depending on factors such as credit, income and loan to value.  That same scenario on a jumbo loan amount may be looking at rates in the low to mid 6% range.  With that being said, rates are very good today, getting back near all time lows.  With the uncertainty in the markets, fears of a recession looming and the tight credit markets, I anticipate rates continuing to come down as we look to the future.  So if rates are probably going to continue to fall, does it make sense to wait on exploring your refinance options?

Probably not.  I would suggest looking into what is available now due to all the uncertainty in the air.  Credit has been tightening, property values have been declining, and both issues could very well continue to deteriorate.  If you are at a good loan to value now that will qualify you for the best rate possible, there is no guarantee that the value of your property will not continue to decline, pushing that loan to value higher.  As your loan to value gets higher, loans become more costly and more difficult to obtain.  If credit continues to tighten at the same time your loan to value climbs, you may not have the same loan options in the future that you have now.  A bird in the hand is worth two in the bush!

Instead of looking at where rates could go in the future, take a look at what today’s rates can do for you.  If you have an adjustable note, or a higher rate fixed loan and today’s pricing can improve your situation and allow you to sleep well at night knowing that your payments will be fixed for the next 30 years, it makes good sense to explore your options.  You can use these mortgage calculators to see what the potential savings may be, and you can contact me anytime to personally review your situation and go over your loan options in today’s market.

With the uncertainty in the housing and financial markets has come another great opportunity to take advantage of mortgage rates approaching all time lows.  Now is the time to look at all of your options, particularly if you have an adjustable rate mortgage due to reset.  The biggest issue I am having with existing clients who want to refinance is the amount of equity they have lost in their property due to the declining market.  If you have the equity to take advantage of the current lending situation, my advice is to lock in a great loan sooner rather than risk losing that option later.