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Bernake said he won't consider touching them for at least another year.

You should just refinance the place. No need to wonder where rates will be in the future. You take what is available now (take the benefit now, even though it may not be the best outcome if rates goes down further), whatever happens in the future will be a future consideration. I will even go as far as to say buy down a little explained below.

To answer the question, I strongly believe mortgage interest rates will be going up, 4.50- 5% within a year. Mortgage tracks long term bonds rate, not fed fund rates. There will be no QE3 and eventually even the fed chief will announce some tightening in the future. Bond yields will track well before that in anticipation, which may be as early as this summer.

If rates go down, then refinance again. That is the only way to play this.

nobody knows

It is going down along with the prices.

The rates are going down, but the hidden fees are on the rise.
What good is a 3% rate when you're laying out an additional 2 or 3 points on fees to nowhere?

The same direction they have been since 2007. Down! The fed hasn't stopped robbing money from people's savings account just yet.

TPB says

The rates are going down, but the hidden fees are on the rise.
What good is a 3% rate when you're laying out an additional 2 or 3 points on fees to nowhere?

Forgive my naivety, but what are the "hidden fees" you refer to? Wouldn't those have to be disclosed in the Goof faith Estimate?

The thing is, I have a fixed 4.75% now. And I'm guaranteed to have my job through June (and a 75% chance for a year after that). My credit is excellent. On top of that, I expect real estate to drop another 5-10% in LA before it settles. If that's the case, I don't want to wait too much longer to refi because that means i will have to bring more and more cash to the table in order to have the right Loan to value ratio.

On the other hand, if i can't save at least 1% it may not be worth refinancing.

So that's where I am. And that's why I'm soliciting opinion on the direction of mortgage rates. I appreciate (most) of the opinions so far and would welcome anyone else's.

Thanks!

clambo says

Bernake said he won't consider touching them for at least another year.

That's my understanding as well.

If we get a new President and Fed chief, that would almost certainly change.

But does the fed set mortgage rates, per se? Also, I guess I'm wondering if anyone think rates have a decent chance of going down and, if so, when/why?

rates will go up then back down, repeat 4eva.

the reason is to fleece as many borrowers by the maximum amount.

average buyer stays in home 7 years.
so if they raise and lower rates on a 3.5 year cycle they will 'get' fees outta maximum people. its called churning.

the fed will say 'uh oh ecnomy needs stimulous' which is code for 'banks not making enough money this quarter' so they lower rates briefly to stir up refi boom ($$$$) then raise rates when the boom slows (they cant let very many buyers get in at the low low rates - so they go up again to snag buyers who will later refi when they decide to lower rates.... on and on.

just pay off the loan!

I had a 4.87% 30 year fixed.. and I refinanced back in October 2011 at 3.95%... Paid no fees, no points.. It was a no-brainer.

My broker actually got my PMI lowered quite a bit as well... because the appraisal required for refinance gave me a 15% equity position.. 5 months prior I came in with only 10% down at 4.87%. Appraisal at the time of purchase was $30K over my purchase price.. but PMI was still stuck at the higher loan/ratio rate until the REFI.

If i were trying to get the same refinance now.. I have a strong hunch my appraisal would come in significantly lower.. been a brutal Fall/Winter in my neighborhood for COMP prices.. lots of REOS and Foreclosures would make a 15% equity appraisal a long shot. So I'm very happy with my refinance. Saved me nearly $300 a month adding the PMI deduction and 1% drop in interest rate.

My advice is interest rates are gonna be hovering just below 4% for the next 6 months... But who knows what will happen in your local real estate market. I would imagine prices will stabilize or rise a little most places heading into Spring buying season...

Keep an eye out for ALL sales in your neighborhood.. the second some higher comps and sales start trickling onto the market within a half mile of your house... RUN OUT AND REFINANCE. The trickiest thing with refinancing is getting a good appraisal if you have less than 20% equity... PMI keeps getting fees added to it... Even if rates drop another 1% it might not make sense for me to REFI if my PMI would increase due to a lower appraisal. Lots of numbers to crunch...

BoomAndBustCycle says

I had a 4.875% 30 year fixed.. and I refinanced back in October 2011 at 3.95%... Paid no fees, no points.. It was a no-brainer.

How did you get no fees? You mean you paid nothing to refi?

PockyClipsNow says

just pay off the loan!

I'd love to. feel free to help...

marquismark says

How did you get no fees? You mean you paid nothing to refi?

yep NOTHING... nada.. zip. Well, i had to come to the table with a chunk of cash about $7K...(for escrow/ pre-paying taxes). But when you refinance.. you don't pay your mortgage for the first month of the refinance...so subtract that from that figure... And I got back nearly $5K from my prior lender a week later from my old impound account.

When i crunched the numbers.. I actually made like $400 in cash refinancing all said and done.

Well done, Sir. I doubt I'l be able to do that with my current lender since I don't have an escrow account with them (I assume by escrow acct you mean the taxes and insurance that get impounded).

marquismark says

Well done, Sir. I doubt I'l be able to do that with my current lender since I don't have an escrow account with them (I assume by escrow acct you mean the taxes and insurance that get impounded).

whoops, yeah I meant impound account...