The key to saving as much money as possible when refinancing a home mortgage is the interest rate. Many people are taking advantage of the current low interest rates and getting themselves a mortgage refinance that is saving them hundreds of dollars per month. However, I think that things will be changing throughout 2010 as the economy improves. Here are my mortgage interest rate predictions, trends and forecast for 2010.

Right now a homeowner can get a 30 year fixed loan for around 5%. This is dramatically lower than interest rates that were available just 10 years ago. Many homeowners are easily reducing their interest payments by half because of the current housing market and low interest rates. However, as the economy and housing market improve, things will change and interest rates may rise.

I predict that throughout 2010, mortgage interest rates will consistently, but slowly, rise. The end result will be that mortgage interest rates end up around 6.75% - 7% for a typical 30 year fixed rate mortgage. While this rate will still be low enough for many people to save money, it will cost everyone who refinances more money. A 1.75% - 2% increase will even eliminate the potential benefits for some homeowners who want to get a mortgage refinancing. No matter what though, even a little rate increase of 2% adds up to a lot of money in the long run.

I think that mortgage rates will rise due to a better overall economy, and a more stable housing market. This is because of the fact that the economy is slowly getting better and homeowner’s financial situations are gradually improving. Also, President Obamas stimulus plan is making things much easier for millions of people who are using it to get a mortgage refinance that is saving their homes, and money from their monthly home loan payment. As the stimulus plan tails off, and the economy improves, mortgage rates will inevitably rise. Though the rise will not be huge, it is a sign things are getting better for everyone.

Homeowners should take action now and refinance before home interest rates rise again. Do not think that rates are going to get any lower; they are already near all-time lows. However, do consider taking action now and take advantage of the low interest rates currently available.

-M Petrone

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