This IS it . . . and I am letting you know.

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Certainly by now, you have heard that a few people have refinanced their mortgages, taken advantage of the lowest mortgage rates in history and are currently saving hundreds of dollars per month (thousands of dollars per year, thousands and thousands over the life of the loan, etc).   What you may not realize is that now could be your best time to take advantage of crazy-low interest rates because it may be your best chance to qualify.  That’s right . . . if you wait any longer to refinance your mortgage, you may not qualify!

And here are four reasons why:

1. Program guidelines are changing.  As an example, in the past few days, the guidelines for an FHA streamline refinance have changed essentially taking the “streamline” out of the process.  A FHA to FHA refinance used to be a mortgage-history only qualifying loan (no employment, no income and no assets required).  Now, these types of loans require proof of employment, proof of assets and a minimum credit score requirement (in addition to a 12 month perfect mortgage history payment).

2. Your home value is changing.  As more borrowers find themselves in trouble financially and more homes go in to foreclosure and as those homes are sold by banks, the comparable sales for your neighborhood will likely go down.  And because the loan-to-value (the proportion of your loan balance in relation to your property value) drives the PMI (private mortgage insurance), helps determine your available interest rate, and is factored in by 2nd mortgage companies processing subordination requests, every dollar in an appraisal counts.  Some homeowners may not qualify for financing at all depending on how far their property value may have dropped.

3. Your credit score is changing.  More and more credit companies are lowering credit limits on credit card accounts and home equity lines of credit.  As this happens, the proportion of your credit balance to available high credit increases (your card balance is now closer to the high credit, or closer to being at the maximum limit).  This proportion is used in the calculation of a credit score and as the balance moves over 30%, 50% and 75%, your credit score increases each time.  So even your balances stay the same, a dropping high credit, could translate in to a dropping credit score . . . and a lower credit score = a higher interest rate.

4. Interest rates will be changing.  Mortgage rates are historically low for one reason and one reason only.  The US Government is buying mortgage-backed securities (MBS).  The US Treasury has been purchasing $14 to $20 billion dollars per WEEK in mortgage backed securities in order to drive mortgage rates down.  This trend is set to continue with a gradual reduction until the scheduled end date of March 2010.  Once they withdraw from the MBS market, most assume that mortgage rates will go back to their previous levels of 5.75% to 6.25%.  Others, more fearful of inflation (the enemy of long-term mortgage debt) think mortgage rates may go even higher than that after March 2010.

This week mortgage rates came very close to their lows for the year.  If you have been “thinking” about refinancing your mortgage, but have not yet taken advantage of (literally) the lowest rates in history, now is the time.  So if you are thinking, “If this is it . . . pleeeease let me know . . . ”  — this IS it, and I am letting you know.  Thanks Huey.

P/S — I know the music video would have been better, but it is “unable to be embedded”.  So if you are in need of seeing the video, check it out here.  : )

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