Interest rates are DROPPING like a rock. One day last week rates went to 5.1% on 30 year fixed rate mortgages. This low rate only held for 4 hours, but still, rates are dropping like a rock. So how do you know when to fix your rate? When will they go up? If you fix a rate are you "stuck" with it?
It can be quite a job of speculation to decide when you should fix your rate. News of the feds dropping the wholesale rate makes everyone believe the home mortgage rate will drop too. This CAN be true, but not allways. The fed rates drop as a way to stimulate the economy. The mortage rate is low due to the slow economy. So, at some point the stimulation of the economy will cause a RISE in rates instead of a drop. That is where speculation comes in!
If you fix a rate, you are not STUCK with it untill after you close on the loan. You may have to pay a penalty ($300) to get out of the loan, but you are not bound to it until you sign at closing. Some loans have provisions to fix your rate while you are shopping for a home. If the rates drop prior to you finding a home and closing on it you have a one time ability to reset the loan rate at the lower rate.
Hmmmmmm......all this talk of rates makes me want to move or refinance.......
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