mortgage

Mortgages hit record; signal refinance

For those borrowers who have not been able to find lenders offering the rates they expected to find, here is a lesson: "When rates fall, you need to be ready," Green says. "The early bird gets the worm."

But if you weren't an early bird, don't panic.

Even if rates rise slightly in coming weeks, they will remain near historically low levels, mortgage specialists say.

There's more to refinancing than rates

When refinancing, rates shouldn't be your only concern, says John Stearns, a mortgage banker at American Fidelity Mortgage Services in Mequon, Wis.

"Borrowers need to think about what's going to happen with property values," he says. "What's their house going to be worth in six months? If prices fall they may not be able to refinance. What's your debt-to-income ratio going to be, or your employment situation? You need to consider a lot of different factors. If you can refinance now and it makes sense, don't wait."

Declining property values, which often result in lower-than-expected appraisals, have been one of the biggest impediments to borrowers who want to refinance but don't have enough equity on their houses.

Low appraisals have also been a huge obstacle to sellers and kill many purchase contracts when the buyer tries to get a loan.

The number of pending contracts to purchase previously owned homes dropped 1.3 percent in July, according to the National Association of Realtors' latest report. The number of closed sales fell 3.5 percent in July, according to NAR. Realtors say contract cancellations that resulted from poor appraisals contributed to the decline in sales.

Low rates not helping housing market

And low mortgage rates can't solve that problem. Regardless of how low mortgage rates get, the housing market won't rebound until the economy adds more jobs and the foreclosure crisis gets under control, says Stearns.

"We've had pretty low mortgage rates for a while now, and how has that helped?" he says. "I don't think low mortgage rates are going to be the solution to the problem."

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