A lot of homeowners are looking into mortgage refinancing as a way to save money, their home, or both. Right now is a great time to get a home loan refinance due to interest rates that are near all time lows. However, these record low interest rates will not last forever. Here are my mortgage interest rate predictions for 2010 and how it can effect a homeowner looking to refinance.

Interest rates have remained very low in an effort to help homeowners avoid losing their home to foreclosure or default. With interest rates as low as they are, many people are able to get a mortgage refinancing that will save them a lot of money every month. Ever since the housing market and overall economy has been going down, so have interest rates. If interest rates were to be high, many more people would lose their home. However, right now interest rates are less than 5% for a standard 30 year fixed rate mortgage. This is half what the rates were just 10 years ago and enables many people to refinance and save a lot of money. However, I do not think that these interest rates will remain this low for much longer.

I predict that sometime around June 2010 mortgage interest rates will rise again. The increase will not be dramatic but will effect many people who have yet to refinance their home loan. Every time a interest rate increase happens, it increases the cost of taking a loan for everyone. I predict though that around June 2010, mortgage rates will increase by around .5%. This is not enough to make refinancing a bad decision, but will make the process more expensive.

I think that the rate increase will happen due to a better and more stable housing market. The stronger the market, the more interest rates will rise. While I think that the first increases will be small, after a few of them it will add up to a 2% or more rise in rates from where they currently are. This is a big increase when totaled together and will make refinancing a mortgage a bad decision for many people.

For now though, and even with the initial rate increases, refinancing a home loan is a good decision for a lot of people. Homeowners should take advantage of the low interest rates that are available now and refinance their home loan. Waiting any longer could cost homeowners more money due to increased interest rates.

-M Petrone

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