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6 July 2009

Mortgage Rates are Rising! What Should I Do?

In the past few weeks, mortgage rates have been rising steadily. While this may come as a shock to many home owners and potential buyers, it’s actually the result of some relatively positive news. After months of continual decline, the economy is showing signs of coming back to life. This has caused investors to start worrying about inflation—especially with all the government stimulus that’s been poured into the economy—so they’re starting to demand higher interest rates on their long term bonds. Since long term mortgage rates are based on the bond market, this has caused mortgage rates to rise too.

So what happens next? Experts are split on whether rates will continue to inch up or stay pretty much where they are. Either way, the reality is that rates are still very close to historic lows. If you’re thinking about buying or renewing, locking in today’s rates is still a very attractive option. In a few years, the fixed rate you take today will look even better since rates will almost certainly be higher by then.

The other option is to keep floating for a few more months. Some experts believe that the current optimism about the economy is a little premature, and mortgage rates may even slide back slightly, at least in the short term.

In the end, deciding whether to lock in or float should be based on your financial needs and plans. As your mortgage advisor, I can sit down with you and do a thorough analysis of your situation, including your current mortgage, house value, employment situation and long term goals. By understanding your current realities AND current rate projections, we can develop a mortgage strategy that will save you money and help you become financially secure. Call me today to take advantage of this FREE service.

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