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Re-financing in uncertain times

The Fed lowered rates three times the second half of 2019 trying to avert a potential slowdown in the economy. So far, they’ve done a good job. At the end of 2019, the unemployment rate stood at 3.5 percent and all three equity indices stood at near or all-time highs.

Mortgage rates stood at near historic lows with the 30-year at 3.5 to 3.875, the 20-year at 3.375 to 3.750 and the 15-year at 3.125 to 3.375.

Where are mortgage rates headed from here? According to economists from Fannie Mae and Freddie Mac, mortgage rates should slightly trend down in 2020 and 2021.

I agree that rates could trend down in 2020 and 2021 and that we could see rates come down substantially if we see a slowdown in the economy in the second half of 2020. But the U.S. could also put together a trade deal with China and continue to have the economy move along at its current pace.

It’s so hard to predict when we’ll bottom out and when to refinance. One solution is to do a no-cost refinance.

How is this possible? For loan amount that are $150,000 or higher, the lender can give you a credit to cover your closing costs if you take a slightly higher rate, 1/8 or 1/4 above the market rate.

We have been recommending this option because if rates do come down again in 2020 or 2021, borrower can easily refinance again because they have no investment into their first refinance.

Usually when you refinance and pay closing costs there is a time period that must pass in which you make up the costs of the refi.

With a no closing costs refinance you’re saving money with your first new mortgages payment.

To contact me, call 773-557-1000 ext. 15, e-mail ron@ronmortgage.com or click here .

About Ron Ricchio

Renato (Ron) Ricchio is president of Chicagoland Home Mortgage. He grew up in Westchester and attended St. Joseph High School and DePaul University, taking a job as a loan officer in the mortgage industry soon after graduating with a bachelor's in finance in 1991. He started his own company in 2001, which he operates today. He has been ranked in the top 150 loan originators in 2010 and 2011 by Origination News. Ron is happily married with three beautiful children. A board member of San Francesco Di Paola Society and the founder of Ricchio Family Toy Drive for Lurie's Children's Hospital, he enjoys cooking and spending time with family and friends.