Every time I turn around I keep hear “interest rates are at historic lows” and “now is the time to buy or refinance”.

To be sure, what I am hearing from mortgage people is that it is time to refinance…not necessarily the time to buy.  Why?

It seems pretty self evident to me but, then, I’m in the business.

Mortgages for the purchase of homes are extremely hard to get. You have to have platinum credit, excellent income, a low debt-to-income ratio and money in the bank.  Even if you have all those wonderful qualifications there is some chance that a mortgage underwriter is having a bad hair day and will find some reason to turn down your loan. Best case scenario is that you’ll be sitting on pins and needles until the day of closing wondering if the loan is going to be funded or if the paperwork from the mortgage company will be delivered t the title company on time.

Is It Time To Refinance?

I would think with mortgage rates in the low 4s for traditional 30-year fixed rate mortgages and in the high 3s for traditional 15-year fixed rate mortgages and in the low 3s (and sometime 2s) for the Adjustable Rate Mortgages that is, in fact, time to refinance.

The real challenge is getting your house to appraise.

That’s right.  Even if you are perfect with your mortgage payment history, make tons or money, have an excellent credit score, and have virtually no debt…you still can’t do jack unless your house has the value it needs for some mortgage company to say, “OK, we’ll lend you the money.”

Lots of good people, responsible people will be left paying mortgages with “high” rates — meaning rates in the 5s (gasp!) — because the house they live in has declined in value to the point that there is either negative equity, zero equity or less than the 20% equity you need to avoid PMI.  Of course, if you need PMI you might as well hold tight.  PMI is money down the tubes and would negate any savings you might have made from refinancing.

It’s ALWAYS Time To Buy

It seems that no matter what year it is or what time of the year it is, it is always time to buy or refinance.  Historic low mortgage interest rates, low home prices. Or people will throw the fear of God into you: “Mortgage Rates Are On The Rise!” “Have We Hit The Bottom For Home Prices?!”

Here’s the bottom line for me:  If you would like to buy a home…it’s time.  It doesn’t matter if this you’re moving out from your parent’s place or getting married or moving to a new location for a job.  There are lots of good reasons to buy a home that have nothing to do with mortgage rates and home prices.

Ditto for refinancing. Sure. It would be great to have nice low payments but 30 years is 30 years and every time you refinance the clock starts over. Most people don’t stay in their home the full 30 years anyway.  Yes.  Some do.  A lot do not. So, if you’re comfortable making the payment you’ve been making and you enjoy your house then the cost of refinancing may not be the most cost effective (refinancing is not free, by the way) solution for you.

Plus, if your house doesn’t appraise for the value it needs for a refinance you’re out the appraisal fee.

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