Mortgage Blog

While I was on vacation the weekend at San Francisco,
I got the email from one of the mortgage magazine,
it indeed had the similar subject.

I tried to write something similar, but I think
it's better to borrower their subect, it is more
eye-catching title.

First, Let's reviewed my history of "predicting the
interest rate". Since 2008, I predicted the rate
would go over when the financial crisis just started.
Then I predicted the lower ARM rates first, and called
the ARM bottom of 2.375% to 2.5% rate for 5/1 ARM.
Staring last year, I predicted the 15 yr fixed rate
would go lower around 2.5% to 2,625%, and ARM borrowers
would switch to 15 yr fixed.

And now, I agree with some of the other mortgage
experts, the rate will go up from here, though
slowly and spiral way. The reason was very simple:
the noise from Fed members to stop QE x purchase,
the improved economy(or a little bit better),
the recovery of real estate market, the not worse
ECB. All the numbers suggested low lower rates almost
impossible.

Then what we should do in the current market:
1)Try to fix the rates if you have ARM and
plan to stay long term.

2)Try to pay some closing cost to get
some better Refi rates. Usually the no closing
cost strategy works the best when the interest
rate going lower. When or if it goes up,
then better to pay the closing cost.

3)No closing cost rental is almost imposible now,
either for ARM or 30 yr fixed(15 yr fixed still
possible), then we need to change our mind-set,
it is OK to pay some closing cost for the rental refi.
For example, if the current rate around 4.375% to 4.5%
for 30 yr fixed, there is nothing wrong to get
3,5% rate with some closing cost. The break-even
time is about one or two years. It will improve the
cash-flow.

Sorry, It took me so long to finish this blog.
A few readers indeed asked me when I can finsih it.
And I am glad that I had it done today.