Contributed by Tim Coutts, President of CB&T Mortgage
While the dust settles from the political arm wrestling over the debt ceiling increase, the downgrade of US debt and the slow pace of economic recovery, a bright spot has emerged – mortgage rates. Mortgage rates have fallen to historic lows and a refinance could represent a real opportunity to improve your personal financial situation.
The recent fall in the stock market has investors seeking the safety of US government treasuries. The increased demand has pushed yields dramatically lower on 10-year treasuries. Since mortgage rates move in tandem with the yield on 10-year treasuries, we are seeing 30-year mortgage rates near 4% for conventional loans and below 4% for government (VA and FHA) loans. A refinance of your existing mortgage could substantially reduce your monthly payment.
An attractive alternative for some homeowners is the 15-year mortgage. The shorter maturity results in a lower rate than a 30-year loan. Today’s 15-year rates are in the low 3% range. A shorter maturity and lower interest rate means more of your monthly payment goes to reduce the loan balance. If your plan is to have your home paid-off by the time you retire, this may be just the product for you.