Before deciding to sign on the dotted line it is very important to do your research and due diligence. WIth the Internet have a great deal of available information it should not be difficult to find out a large amount on almost any mortgage lender in the country.

With current 30 year fixed mortgage interest rates being quoted around 4.5% now might be the time to take action. There are mortgage calculators online that can help you determine just how much money you can save by locking in to a low refinance rates in June of 2010.

Author: Mike Garner

The mortgage rates forecast for this week is looking a little better for homeowners.  Since the 10 year treasury rate hit right below 4% it has been a straight shot down to 3.71%, shedding another 2 percent today alone. As I predicted last week, the treasury rate had plenty of room for a pullback after a meteoric uptrend from 2% to 4%.  It looks like support for the 10 year is around 3.4%, but we know in this market anything can happen.  If we do see the 10 year go this low, mortgage rates could pull all the way back into the 5% range.

With this knowledge, the mortgage rates forecast does not look nearly as bad as it did two weeks ago.  Obviously, any flip of the printing press switch by Ben Bernanke could change everything, but for now, it looks like a healthy pullback is in store for mortgage rates before we see possible higher rates.  Average mortgage rates are likely to be in the 5.4% to 5.6% range this week based on when you talk to your mortgage lender.  With that being said, it might be worth it to see if rates do get that healthy pullback before attempt to refinance or get that first mortgage.

It has been once crazy market lately and the stock market has not even taken part in it.  Today was saw a huge sell off on Wall Street, so stocks might be taking the headlines with their volatility while the 10 year treasury rates and current mortgage rates take a rest for a few weeks.  This is exactly what the housing market needs because positive sentiment is very important.  If rates are fluctuating on a daily basis, it is very hard to create anything positive.  For now, the mortgage rates forecast is for rates to stabilize or head slightly lower.

How high will mortgage rates go is a question that almost every home owner is wondering right now.  Over the last three weeks mortgage rates have gone from 4.8% to 5.59%.  Some nationwide mortgage lenders are reporting rates as high as 5.95%.  This is a very scary thought if you were in the refinance process.  It is an even scarier thought if you are planning to buy a house in the next few months.  The difference in a percentage point on a 30 year fixed rate mortgage could be tens of thousands of dollars over the lifetime of the home loan.

Another major area of concern are those trying to get a home loan modification to stay in their homes.  President Obama created the Making Home Affordable plan in an effort to allow everyone access to low mortgage rates.  Well, what if mortgage rates are no longer low?  For those that cannot make their mortgage payments and were hoping to modify to low payments, higher mortgage rates might be the nail in the coffin.  Mortgage lenders and banks will still work with these individuals but there is nothing the financial institutions can do if rates are moving higher.

I personally feel that the fluctuation in mortgage rates is very bad news for the overall housing market.  When mortgage rates were near historical lows, we still did not see a bottom in home prices.  Now that mortgage rates are going higher, home prices are sure to fall even more.  Maybe this is just what we need, a final freefall in home prices that will clear out all the excess supply.  It is a very scary thought, but sometimes its easier to just rip the bandaid off rather than slowly pulling it as we have been for over a year now.

The one thing that all economists and market mavens agree on is that the economy is in horrible condition.  Just how bad of condition is up for debate.  One of the most intriguing questions that we can currently ask is will low mortgage rates help the economy?  The president and Federal Government sure seem to think so; they are sinking trillions into the theory that low mortgage rates WILL help the economy.

Ben Bernanke and President Obama have made it quite apparent that they feel the housing market is going to lead us out of this recession.  There is so much money and credit involved in housing that is is the number one influence on American’s lives in the current economic state.  The largest financial burden that most American citizens have is paying their mortgage each month.  It is also true that the largest financial decision most American adults make is which house to buy and how much to spend on it.

Unfortunately, many young adults have been told that buying a house is the best financial decision they can make.  Why is it the best financial decision?  The answer that most people give is because it is an investment that always goes up in value.  Well, that is not the case anymore.  The bubbles that were created in the 1990s and early 2000s prove that what goes up must come down.  If you were an unfortunate home owner who bought near the top in June of 2006, you are learning that the hard way.

Some markets are down over 50% since the top and it is likely to get worse as foreclosures continue to rise.  The government is doing everything in their power to make sure that foreclosures decline, but it is not working as they thought.  The amount of unemployment coupled with the decrease in home prices is absolutely killing some of the bubble markets such as Phoenix, Las Vegas and Miami.

There is little doubt that there is great money to be made in this markets many years into the future, but only the extremely smart individuals have money in the current economy.  All of those young adults who bought a home between 2006 and today are likely to be underwater in some of the major housing markets in America.  There is very little to do about this as there is no way to force home prices to go up.  You could renovate and make your house more attractive but that is taking even more money out of the wallets of people who are struggling to make ends meet.

With this situation being the case, isn’t it the case that low mortgage rates will help the economy?  I would argue that lower mortgage rates are going to do very little to help the economy.  If mortgage rates are at 2% and the unemployment rate continues to rise, will it really make any difference?  People need an excess of money to make big financial decisions.  If there is very little money being made in the current economy, who is going to be able to buy a new house?

Getting new homes off the market is the major occurrence that needs to happen.  Obviously many current home owners will refinance at lower rates and save some money that way, but are they going to use that money to buy another home?  I seriously doubt that to be the case.  They will use the money to stimulate the economy in some way, but it is highly unlikely that they will refinance at a lower rate and turn around and buy another house with their savings.  It is possible that some home owners will do that, but not enough to get the new housing supply under eight months.

The only way that new housing supply is going to greatly decrease is if there is a swarm of new home buyers that hit the market.  Well, now that college graduates are finding it harder and harder to land a solid job, who is left to buy up these homes?  Until there is a hiring increase throughout the country, it is hard to imagine that many recent grads are going to sink a huge amount of money into a house that could decrease in value as soon as they buy it.

Another problem with relying on recent college grads is the fact that many of them are already in debt because of college loans.  I have many friends that are relucatant to buy a house today because they want to pay off a large part of their college loans first.  They are also extremely scared that they are going to get ripped off or buy a home that sees a strong decline in value for the first few years that they own it.

Most college students have not studied the housing market or mortgage rates that much.  I would be willing to bet that many of them have no clue that mortgage rates are near historic lows.  I am sure there is a way to educate the future leaders of this country, but we have yet to figure it out.  Do not get me wrong, there are some college students that already own a home and are subleasing it out to their buddies, but those young entrepreneurs are few and far between.

Overall, I think the fact that college grads are struggling to find jobs is going to prove that low mortgage rates will not help the economy.  Low mortgage rates will spark the interest of current home owners who have been thinking about refinancing but that is going to do nothing to get housing supply off the market.  I know President Obama and Ben Bernanke think that housing will lead us out of this troubled time, but we truly need to create jobs to assist the current housing market.

If you are a recent college graduate who is looking for a job and you are debating to buy a home or not, please educate yourself to the best of your ability.  Do not let friends, family, mortgage lenders or tv shows tell you that you should buy a house.  Do your research and make that decision for yourself.

Last year the government decided they would start “bailing out” the mortgage lenders by propping up Fannie Mae and Freddie Mac.  Well, little did the American public realize that this would continue for over a year and BILLIONS of dollars would be used.  It is possible the government knew the depth of the subprime mortgage crisis but they sure didn’t rely that message through the media.

Now we have to wonder if it will get even worse.  The overall housing market continues to decline in value as shown by the Case/Shiller Index and we don’t really know if we will see a bottom anytime soon or not.  We can only hope that the extremely low mortgage rates will spark interest in the housing market and put a bottom in home prices.  The only way we will figure this out is with time.