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Government-is-now-Open-300x250The government shutdown has come to an end, but how does the House’s last minute deal and the post-shutdown environment impact mortgage rates? With the debt ceiling stalemate in Washington resolved at least until February 7, 2014, rates could dip in the short term.

In fact mortgage backed securities (MBS) climbed 95 basis points last week. When MBS goes up in price, mortgage rates go down. The week saw another .125% improvement in rates and brought the average 30 year fixed rate closer to 4%.

Home builders stalled by the government shutdown will resume confidence and government-affiliated mortgages such as FHA, VA, USDA and FEMA loans will continue running smoothly. But over the long term, mortgage rates will rise. The Federal Reserve is committed to “taper,” or reduce its recent purchases of bond buying, which it had started doing to stimulate the economy. As the economy strengthens, tapering will begin. When? Nobody knows for sure, but when it does, rates will rise–and possibly faster than borrowers will be able to anticipate.

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With the rates going down again, it opens up refinance opportunities for several people before rates start climbing up again. You may still benefit from refinancing if you would like to:

Get a better rate : If you closed your loan in June/July, chances are you are at a higher rate than what is currently available.

Get rid of mortgage insurance: Let us analyze your current mortgage to see if we can help you get rid of mortgage insurance by refinancing into a new loan. There are Conventional loans without mortgage insurance with as little as 5% equity.

Change the loan type: Because of your change in goals, you may like to move from a Fixed mortgage to an Adjustable or vice-a-versa.

Move to a lower term: If you can afford and can qualify for a higher payment, moving to a lower term mortgage like a 15 year fixed can save you several thousand dollars in interest and mortgage payment cost.

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