Mortgage rates are near record lows right now and many people are trying to refinance a mortgage to take advantage. However, I think that throughout 2010 mortgage rates will gradually rise. This does not make refinancing a bad idea but it will make it cost more and a few homeowners will no longer be able to benefit if rates rise. Here are my mortgage interest rate predictions for 2010 and how I made them.

Homeowners looking to refinance right now can benefit from interest rates that are around 5% for a typical fixed rate mortgage. A general rule of thumb is that if a homeowner can save 2% or more in interest rates, refinancing a mortgage will be beneficial. Now though, with rates as low as they are, many people are able to save 5% or more in interest rates alone. This can equal a lot of money every month and thousands of dollars in savings throughout the life of the home loan.

Even though 2010 has just started, many homeowners are still applying for mortgage refinancing. At this rate, refinancings will be at an all time high by September, but that may change. I predict that sometime around April, mortgage interest rates will rise. I think that due to an improved housing market and overall economy, many homeowners will be in a better financial situation than they are in now. While these homeowners will still want to refinance, mortgage rates will rise by then to make it not so beneficial for some people.

I predict that mortgage rates will ultimately rise by 1.5% by the end of 2010. While this does not seem like a lot, it really adds up fast over the course of 30 years on a large loan. This rate increase, though minor, will eliminate the benefits of refinancing a mortgage for some people. However, many homeowners will still be able to see huge benefits of refinancing a mortgage, even with these rate increases in interest.

I think that interest rates will rise due to mortgage lenders and banks holding back on approving some homeowners due to the improved economy. This means that struggling homeowners should take action now to ensure that they are able to actually get approved for mortgage refinancing. If the mortgage lenders and banks are less likely to approve people, they will increase rates. While they can not increase interest rates too much, 1.5% should be adequate to generate them even more profits and still make refinancing a mortgage a good decision for many people.

Take action refinancing a mortgage now before things get harder or more expensive in the future.

-M Petrone

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