Starting the New Year with Lower Interest Rates

Freddie Mac reported that interest rates were slightly down the first week of the new year compared to the last week of 2009. That is good news for buyers and sellers.
For the week ending January 7, 2010, 30-year fixed rates averaged 5.09% with 0.7 points, which was down from the previous week's average of 5.14%. Rates were up slightly from the same time last year when the 30 year fixed rate mortgage averaged 5.01%.

15-year fixed rate mortgages for the week ending January 7, 2010 averaged 4.50% with 0.7 points, which was down from the previous week's average for fixed rate mortgages of 4.54%. Rates were slightly up from the same time a year ago when the 15-year fixed rate mortgage averaged 4.62%.

The 5-year adjustable-rate mortgage (ARM) averaged 4.44% for the week ending January 7, 2010 with 0.6 points, remaining the same as the week before. Rates were down from a year ago when the 5-year ARM averaged 5.49%.

The 1-year ARM averaged 4.31 the week ending January 7, 2009, with 0.6 points, down from previous week average of 4.33 percent. Rates were down from the same time a year ago when the 1-year ARM averaged 4.95 percent.

So the good news is 30-year fixed rates are about the same as 2009, with ARM's below averages of 2009.  Industry experts anticipate that the Fed will waiting to see if the economy strengthens before taking any further action sometime in the second half of 2010. Hopefully the recession will be ending soon.

Good Time to Refinance

With interest rates so still low and so many people getting financial relief from the Obama stimulus plan and the housing industry anticipated to improve, many financial experts expect interest rates may go up.

If you have a variable interest rate loan that is about to reset, now is the best time to refinance. It is best to refinance if you can reduce our current interest rate by at least 2%. Otherwise, the savings doesn't make sense, and the costs associated with refinancing won't make it worth your while. Costs associated with refinancing include the lender's fee, appraisal fee, title search and survey fee.
So once you do decide to refinance, you should shop around and find a mortgage product that fits your financial situation. Many borrowers like to work with a mortgage broker who works with many lenders and can match your needs to the right mortgage product.  Take your time and look for hidden fees and avoid pre-payment penalties. Only work with reputable mortgage brokers and lenders.