Refinance Now? Yes!

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I get paid to assist people with their mortgage. Let?s get that out of the way at the beginning. Without splitting hairs, I have to sell people on why they should work with me as opposed to someone else. But what is truly strange in this market is that I also have to sell people on why they should refinance NOW. The reason is because more and more I hear my potential clients saying that they are going to ?hold-off for now? because ?rates are going to go down even lower.?

My job would be so much easier if I had the crystal balls that these people have stuffed away in their basements. Oftentimes I will ask them if they know how many children that I will have or if I can expect a full-head of hair at 60. It would be much easier for these people to answer my questions instead of looking at the birthrates or genealogies of my family. Heck, let?s just throw the question out to the random guy Jim from Gardena, CA who told me this morning that, ?Bush will lower the rates because he is already in a mess in
Iraq.? Zoiks!!! Remind me not to invite him to the Christmas party or let him baby-sit my nephew!

Maybe we should look at the history of Conventional 30-year rates instead of speculating on them like horses at the Del Mar Racetrack? The only guy I knew who bet on horses for a living actually lived in his van (and still does not surprisingly). Did you know that since 1971, in only 3 calendar years did 30-year Fixed Conventional loans average below 6%? To make that point even clearer: out of 432 potential months, only 28(!) of those months averaged a below 6% Monthly 30-year Fixed Average. Right now you can get close to a 5.5% 30-year Fixed Conventional Loan (obviously cash-out and LTV can adjust this). What rates are people waiting for?

In addition to the rates being at historical lows, home values are plummeting as discussed in detail on these very same pages. So, let me get this straight: sit tight, wait for your neighbor?s house to foreclose and kill your home?s value, and then hope that rates go down another .5%. How does that make sense? What if rates do go down another .5%? On a $300,000 loan that saves you exactly $93 a month, or about $1,200 a year. No small amount mind you, that is a substantial sum. But guess what? The odds of those rates returning are about as good as the odds at your local casino. Actually, we?d all probably do pretty well at the casino with our knowledgeable soothsayer Jim from
Gardena.

Graeme isn’t really an angry guy. Occasionally he uses sarcasm to get his point across, but overall he is as happy-go-lucky as they come. Graeme can be reached at gbrown@brownrammortgage.com or www.brownrammortgage.com