As mortgage rates continue to set new record lows, the question is, Should I refinance?

The Federal Open Market Committee, which is the group of Federal Reserve governors who determines the route of our nation's economic policy, released their statements on Tuesday. The policy statement didn't seem to offer any major surprise; they just reminded us that the economic recovery that we are taking will be a slow path. They announced a new plan where they will purchase Treasury debt in the open market. This action was intended to prevent the spread of fear in the marketplace.

After the Fed had announced this decision, stocks sold off and benchmark interest rate moved significantly lower.

This week rates fell to levels that many people in the mortgage business thought they would never see! We are now seeing incredible things happening in the mortgage business. We are seeing most lenders offering 4.25% on rate sheets and some are even willing to go down to 4.125%! Again these rate quotes are only available to borrowers whose pricing is not subject to risk based adjustments. If you are seeking a 15 year term, they are in the 3.75% to 4.00% range.

Frank Nothaft, Freddie Mac's chief economist, said in a report issued this week: "The ability to lock in a principal and interest payment at below 5 percent for 30 years is rare enough. The fact that a 30-year fixed-rate mortgage can be obtained for 4.5 percent, or a 15-year mortgage for 4 percent is an amazing opportunity for borrowers."

We are now seeing that refinancing constitutes most of the mortgage market, accounting for nearly 78 percent of all loan applications nationwide, the Mortgage Bankers Association reported this week. With the rates being so low, many home owners who have equity are refinancing to lower their monthly payments. Do you think rates might go even lower though? There is a possibility, but probably not by much, according to Celia Chen, senior director at Moody's Analytics. "I don't think they're going to fall much further; they're at a record right now," she said. With these rates being so low already, it doesn't seem to have much more room to go lower.

With record low rates and a hurting economy, it seems to be a good decision to think about investing some time in finding out if refinancing can help lower your monthly payments. Contact your local lenders and check online resources to see if this is a good option for you. Your monthly payment could be lowered significantly.

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