Fannie Mae 102-4

102-4 represents where the Fannie Mae mortgage bond closed yesterday.  While the vast majority of the general public (including me, until I really began studying the interest rate markets) has absolutely no idea the significance of this number, it represents a very important decision point for buying a home or deciding on whether now is the time to refinance.

We don’t have to get really technical to give you all you need to know about 102-4.  The most important thing you need to know…102.4 is within an extremely small margin of the all time best close of any trading day for interest rates ever.  In plain terms anyone that is considering buying real estate or refinancing an existing mortgage can understand, interest rates are insanely low right now.  While MortgageNewsDaily.com is showing yesterday’s average 30 year fixed rate a 4.68%, I have locked several loans in the past couple days under 4.5% and those loans didn’t have a bunch of “points.”  Who would have imagined that?

For anyone considering buying real estate (first time home buyers, move-up buyers, second homes, investment/rental) in the next couple years, 102-4 may be the last excuse you need to jump off the fence and make the purchase in the very near term.  Of course everyone is still very nervous about home values, but with interest rates where they are today and very few experts predicting another huge drop in prices this may be exactly the right time to make a move.  Nobody is going to ring a bell at the absolute bottom of the housing market, but the combination of the already dramatically lower prices vs the highs of several years ago and the current interest rate market has me extremely bullish about buying real estate right now.

If you currently have a mortgage, we should probably look at whether a refinance would make good economic sense.  For anyone that intends to stay in their house for more than 2-3 years and has a rate of 4.75% or greater, it may very well make sense to refi.  The interest savings of even .5% on your interest rate could be thousands of dollars over the life of the loan.  If, and only if, the analysis shows a clear benefit with a solid break even point against all fees for a refinance will we even consider moving forward.  For those of you that may be at or near underwater in your mortgage, we should also check the possibilities.  There are many programs available for very high loan to value loans.  The worst thing you can do is wonder whether a refi would make sense and never ask someone that can help you sort through the possibilities.  It cost $0 to ask.

While 102-4 doesn’t appear to mean much, it should have a huge impact on any real estate related decision.  Mortgage rates today represent a huge discount in the purchase of real estate, don’t wait to take advantage of this opportunity.  It won’t be here forever.  I hope to talk with you soon even if you’re not completely sure now is the right time.  Let’s think through the possibilities.