Mortgage rates are currently on the rise despite being at an all-time low, but that doesn’t mean that you should not take a moment to review your mortgage. Peter Tchir, a contributing writer for Forbes, has put forth two key reasons why you should take another look at your mortgage in his article entitled “It Is Not Too Late to Re-Examine Your Mortgage.”
Why Tchir says you should
With 20 years of experience as a trader, structure, and stagiest in markets ranging from Treasuries and High Yield bond trading to CLO’s and CDS indices according to his profile on Forbes, he states that you should see if you have the best “short and long-term borrowing. In fact, he says that you should extend your borrowing if you have not already.
The first primary reason for his recommendation stems from the Federal Reserve. He states that they are currently poised to raise rates. Moreover, they have a bad history of appearing rather “hawkish” in their intentions but take a turn to become more “dovish.” It is for this reason that he thinks we should expect higher short-term rates in the future.
The second reason he puts forth also has to deal with the Fed. They are currently decreasing at a slow rate the size of their balance sheet. Typically, the Fed’s treasury holdings usually get the spotlight, but they are also big in the mortgage industry. “At one time the Fed was buying over 75% of new mortgages being created,” Tchir says. In light of this reduction, he believes that it is “reasonable to expect the spread of mortgages over treasures to increase—making mortgage rates even higher.
What about refinancing?
Besides the recommendations proposed by Tchir, others have been asking this question: is now the right time to refinance? Due to the steady rise of home prices in general across the nation, we find ourselves in an environment that makes refinancing easier.
According to the article “Is now the right time to refinance?” it may be worth taking a look at if it would mean reducing your 1 percentage point off your mortgage rate. The way the current mortgage rates are sitting, you can save “around $100 or more a month for every $100,000 you borrow.”
However, refinancing isn’t for the faint heart. The big thing that you will need to have to see it through is patience. The current average time frame for refi applications to process is 43 days. What you should do is dig into researching lenders and be on the lookout for the best deals.