Homeowners looking to refinance or get a home loan modification can ensure they save the most money possible by getting and knowing when the lowest interest rates will be available. So, here are my mortgage rate predictions for 2009 and 2010, along with how I made them.

Earlier in 2009 home mortgage interest rates were around 4.69% for a fixed rate 30 year home loan. However, with the “Making Home Affordable” plan from President Obama, and the rush to refinance, the interest rates have recently gone up a little bit, about about .5% or so. This is because mortgage lenders and banks have been able to approve more at risk homeowners, and save them money every month through lower mortgage payments, or their home from foreclosure through refinancing or home loan modification. Homeowners knew it was the time to do something to save their home or get a more affordable mortgage, and applied for mortgage refinancing and modification in huge numbers. This rush to apply quickly led to a backup of paperwork for the lenders and banks. As a result, the interest rates were increased by a small amount. This scared off a lot of homeowners, yet still allowed most the chance to save their home through refinancing or mortgage modification. Here are where I will make my predictions, and explain them.

I think that mortgage rates for 2009 will see a drop to their prior lows of around 4.69% for fixed rate 30 year mortgage. This is due to the fact that Obamas home mortgage stimulus plan will still be in effect, and mortgage lenders will be hungry for a new wave of homeowners looking to get a mortgage refinancing or modification. I think that this will all happen around October of this year, 2009, and will last well into 2010, possibly April or so. Right now mortgage lenders and banks are working at a frantic pace to keep up with paperwork, but they will catch up, and rates will drop.

Homeowners who are facing losing their home, defaulting on their mortgage, or any other financial problems, should not wait and try to refinance now. However, if you can, wait a few months and see the mortgage rates drop, then take advantage. This is the best way to ensure you are saving the most money possible on your home loan.

-M Petrone

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