Folks may remember my post last night about reading the tea leaves on where home mortgage interest rates were going. Well, mediocre minds run in the same gutter. Today’s LA Times has an article on just that subject: what to do if you are facing potential refinancing sometime in the future. In short, their recommendations are:
- Shop. Shop around for the best loan, for rates now vary widely. For example, on Tuesday, banks listed on BankRate were quoting rates from 6.4% to 8.1% for a $500,000, 30-year, fixed-rate mortgage for a credit-worthy borrower in Los Angeles.
- Lock. Lock in your rate early, both to guarantee a good rate and to make it more likely the loan will go through.
- Conform. If you are below the $417K confirming limit, there are still reasonable rates to be had for borrowers with good credit.
- Split. Depending on how close you are to the $417K conforming limit and interest rates, it make may sense to do a conforming loan and a second, as you may save money.
- Wait. This will eventually straighten itself out. Exactly when the pundits don’t know, and interest rates could rise for other reasons. Still, if you don’t need to refinance now, don’t.
- Negotiate. If you are buying a house, you’re going to find desparate sellers. Use that to your advantage.
A very interesting article; well worth the read.
ETA: The New York Times also has a good article on the cyclical tightening of the credit market.
