| Frequently Asked Questions
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| Q: | How long could the current downtrend last? |
| A: | Last time, it was 60 months before an uptrend occurred in July, 2005. Therefore, the current downtrend could last until September, 2013. |
| Q: | Within established present facts, how low could interest rates go on a 30-year fixed rate mortgage with no closing costs? |
| A: | The median rate in 2011 on the 10-year Inflation Protected U.S. Treasury bond was 0.700%. The record low margin of the no cost 30-year fixed rate mortgage over the 10-year treasury yield is 1.436%. Thus, 1.436% + 0.700% indicates that 2.136% could be a low. |
| Q: | I hear rates are in the 3% range, so should I now pay closing costs to secure a lower rate than a no closing costs mortgage? |
| A: | No. Because the downtrend is in existence, if you pay closing costs now, then you are forfeiting the opportunity to get the same rate for free in the future. |
| Q: | What is the best strategy to take advantage of the downtrend? |
| A: | Refinance on a periodic basis, approximately every 4-6 months, and ultimately get the lowest rate without paying closing costs. When you cannot get a lower rate and the downtrend is over, then you may consider paying closing costs to get an even lower rate. |
| Q: | How long does it take to recoup closing costs? |
| A: | Usually about 6 years. But, with no closing costs, the savings are immediate! |
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