If you have been paying attention to the recent mortgage interest rates, you know that they are at an all time low. According to Freddie Mac, the new average 30 year fixed mortgage rate is 4.09%. While this sounds delightful, there is a harsh reality to be observed. The first thing most of us think when we see rates like that, is refinancing. Unfortunately, refinancing isn’t quite as simple as it used to be, and even those who seem very well qualified, fail to obtain to lowest advertised rates.
Why Can’t I Get The Lowest Rate?
The gap between the advertised rate, and the rate that borrowers are actually receiving is higher than it has been in over two years, says Yahoo Finance. I had to ask myself why. Why in times like these would lending institutions be turning down business to very qualified borrowers? The answer I believe is quite simple; they don’t have to. The fact is, banks are making more money on mortgages these days. They have tightened their lending policies, and the loans they do make, are for slightly higher interest rates than previously. In some cases, this slight bump in interest rates can bank the lender over $50,000 on a 30 year fixed mortgage. For the time being, it seems like the mortgage lenders are lending smarter, and focused more on long term profits and security. While this isn’t the greatest news for our economy at the present, I do believe that if the lenders stick to these principles, it will be great for our economy in the long run.
Whether you refinance on your current mortgage or not is going to ultimately be up to you. Simply understand that while you may think you are an ideal candidate for a loan, the bank may think otherwise. This doesn’t mean that you still can’t benefit from a refinance, just understand that you may not be getting the low rates you once were guaranteed.
Citations for this post:
- AnnaMaria Andriotis, Where’s My Super-Cheap Mortgage?, Smart Money, 9/08/2011
- Freddie Mac, Fixed-Rate Mortgages Continue To Find New Record Lows, FreddieMac.com, 9/15/2011
