Frequently Asked Questions

Q:

Within reason, how low could interest rates go on a 30 year fixed rate mortgage with no closing costs?

A:

The record low yield on the 10-year U.S. Treasury bond was 2.037%, which occurred in 2008.  The record low margin of the no closing cost 30-year fixed rate mortgage over the 10-year treasury yield is 1.436%.  Thus, 1.436% + 2.037% indicates that 3.473% could be a bottom.

Q:

How long could the current downtrend last?

A:

The last downtrend lasted 47 months.  If the current downtrend is similar, then rates could fall through June 2012.

Q:

I hear rates are in the 4% 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.

Q:

How do 30 year Jumbo no closing costs mortgage rates compare to conforming rates? 

A: