|FAQs on mortgage strategies for 2007
|By Holden Lewis Bankrate.com
situation is unique, it's impossible
to give general guidelines for
mortgage strategies in 2007,
but maybe some answers will
help you in deciding your next
|Here are some commonly asked questions that may help you decide which mortgage products to get and when:
1. What's going to happen to mortgage rates in 2007?
Economists predict that long-term rates will rise in 2007. They made a similar prediction about 2006 and were only partially right: Rates rose in the first half of the year, then fell steeply over the next three months, then leveled off for a while.
The fact is no one can predict the movement of interest rates accurately. It's relatively safe to predict that rates will rise in 2007, but no one knows how far they will rise and whether it will be slow and steady through the year, or if most of the increase will take place in just a few months, with rates being relatively flat the rest of the year.
And the pundits could be wrong -- rates could actually fall in 2007.
2. Should I refinance in 2007?
The answer to that depends on many factors. If you want to refinance strictly to get a lower interest rate, you're probably better off doing it sooner rather than later because most observers expect rates to rise through the year.
There are other
reasons to refinance. Some people
refinance to get rid of mortgage
insurance. Others do it to pay
off their high-rate home equity
lines of credit and consolidate
all that debt into one mortgage
loan. Still others look at refinancing
as a way to escape rising interest
rates on adjustable-rate mortgages,
particularly on interest-only
and pay option ARMs.
If you decide to refinance for one of the above reasons, discuss it with a trusted loan officer or mortgage broker to make sure you have all the facts you need. You might find, for example, that it costs more in the long run (but less in the short run) to consolidate all your debt into one mortgage.
3. When should I refinance?
Refinance your mortgage when
you're ready to do it. In other
words, if it makes financial
sense to refinance at a certain
time, go ahead and do it. Don't
wait for rates to fall further.
You can't know if you grabbed
the rock-bottom rate until after
the fact, so don't even try.
When it comes to mortgages, getting a good rate is good enough. The world won't end if you don't get the absolute best rate.
I wait before I buy a house?
Waiting for home prices to hit bottom is just like waiting for interest rates to reach their nadir. You can't count on timing the market correctly. When you find the right house at an acceptable price, go ahead and get it. If house values in the neighborhood fall after that, well, you didn't buy the house just to sell it a few months later, right? The house is almost assured of appreciating over the next few years, even if its value falls for a while at first.