Mar
21

Refinance While Rates are Low

March 21, 2010

Have you refinanced your home lately? Now is the time.

The U.S. Federal Reserve on Tuesday reaffirmed plans to stop a program that has helped keep mortgage rates down. The current 30-year fixed mortgage rate is just under 5%. Take advantage if you haven’t already.

The Fed has been buying mortgage-backed securities, primarily from Fannie Mae and Freddie Mac, in an effort to improve the housing market. The central bank has bought $1.25 trillion in mortgage securities and assets, which has helped keep mortgage rates at near-record lows.

That program is scheduled to end March 31. Many analysts believe mortgage rates will go up when the program ends; some believe rates could rise more than a full percentage point. If that were true, we could see mortgage rates close to 6%. Other experts believe the effects will be short-term. The Fed is reportedly still open to reinstating the program if the real estate market does take a hard hit.

There is also just a little over a month left to take advantage of the Homebuyer Tax Credit, a program in which buyers can get a tax reduction of 10% of a home’s purchase price (up to $8,000 for first time buyers and up to $6,500 for move up buyers). To qualify, a buyer must have a contract in place by April 30 and close by June 30.

The Fed also said Tuesday that the economy was stabilizing and the job market was improving. Officials confirmed that it will be several months before they raise interest rates from record-low percentages, which are near-zero, in order to assist in the economic recovery.

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