Mortgage Refinance |
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CNBC:
Mortgage Refinance Demand Spikes But Cost May Overshadow Monthly Savings |
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Mortgage Tips for 2018 |
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On Wednesday, March 18, 2009, the Federal Open Market Committee (FOMC) of the Federal Reserve voted to keep short-term interest rates steady at near zero percent. In the press release issued that afternoon, the Fed also announced plans to buy up to $300 billion-worth of long-term Treasury securities from the Treasury Department, and purchase a whole lot more mortgage-backed securities from agencies like Fannie Mae and Freddie Mac. The primary goal of these Fed actions was to keep mortgage rates down and, so far, these specific tactics have been working. The Fed's plan worked. Since 2009, mortgage rates have moved lower at a steady pace, and continue to hover at record-low levels. At the end of 2012, the Fed decided to go all-in to fix the housing sector, and return the US economy to prosperity. They committed to spending many billions per month to purchase both mortgage-backed securities and Treasury debt -- a staggering experiment macro economics. Both actions will continue to place considerable downward pressure on mortgage rates during all or most of 2015. But it won't prod banks to increase their mortgage lending. Despite the super-low interest rate environment, getting approved for a conventional mortgage is not easy, even for the most responsible borrowers. Banks are flush with liquidity, but are very gun-shy, having learned some hard lessons during the 2008 financial crisis and resultant Great Recession. Here are some tips that both refinancers and new buyers should keep in mind:
Both new homebuyers and refinancers should be prepared to do lots of shopping around, not only to get as many free quotes and good faith estimates as possible, but also because many lenders are overwhelmed with applications right now and may turn away even the best borrowers. Borrowers who aren't confident with their deal-hunting or negotiating skills can seek help from mortgage professionals, but they should also consider buying highly recommended books on mortgages from their favorite online bookseller. |
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