November 2nd, 2010 8:33 PM by Uletas Greene Carter
Just when it looked as if mortgage rates couldn't fall any further, they did.
Rates on 30-year fixed-rate mortgages (excluding jumbos) hit an average of 4.3% in September, the lowest level since 1953, according to Freddie Mac, and are still hovering below 4.5%.
Fifteen-year rates are 3.8%. Mind you, those are averages. The most creditworthy borrowers can do even better, snagging rates perhaps a quarter of a percentage point lower.
So what's in this for you? A lot, If you have a credit score of 720 or higher and at least 20% equity in your home, you might use these low rates to shorten your mortgage term, free up cash, for example.
Whatever you decide, don't wait too long.
"The consensus is that rates will gradually move up in the new year," says Frank Nothaft, chief economist for Freddie Mac. Freddie projects that the average 30-year fixed rate will hit 5% by the end of 2011. It's easy to see why more than a quarter of borrowers today are choosing a 15-year mortgage, according to analytics firm Core-Logic, up from 9% in 2007. A 15-year lets you save in two ways. You get a rate that's about half a percentage point lower than that of a standard 30-year, plus you can save tens of thousands by retiring the loan in half the time.
What if you can't manage the bigger monthly bite? Refi to another 30-year and simply pay more in months when you're able to, assuming you're disciplined enough to actually follow through with that plan.
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