Last call for mortgage refinancing

If you waited and waited to refinance your mortgage, only to see rates rise recently, you now may have one last chance. But it's a narrow window. The Fed has made headlines, promising to raise rates enough to control spiraling inflation. The war in Ukraine will make inflation worse as oil prices soar along with grains and soybeans. And inflation inevitably brings higher interest rates.

The one quick mortgage rate opportunity has come because the money has flooded into buying U.S. Treasury securities, widely viewed as the safest haven in the world, temporarily pushing Treasury yields down — and causing mortgage rates to dip slightly. So whether you're trying to refinance or buy a new home, here are some things to consider.

Mortgage rates: A 30-year fixed rate mortgage still costs about 4.25% as I write. A 15-year mortgage has a lower rate of about 3.625%. Many who want to refinance will do just fine with a shorter-term mortgage at the lower rate.

If that monthly payment is too expensive, you might consider a 10-year adjustable-rate mortgage that is amortized (payment scheduled) over 30 years. Today you could lock in a rate of just over 3% for 10 years. But at the end of that period, the rate could jump to as much as 8%. This deal is best if you know you're going to be in the home for only a few years.

Mortgage rates change daily. To get a good idea of the current rates, for either a new purchase or refi in your zipcode, go to Bankrate.com. But no matter what the current rate, the long-term trend is up.

Advice for buyers: If you haven't been in the mortgage market lately either to refi or to buy a home, you need to know how things have changed. This is a very tight market, with many homes selling over the list price, and bidding wars are common.

Leslie Struthers, senior loan officer at GuaranteedRate (Leslie@Rate.com), has some advice for buyers in this tight market.

First, she advises that you get fully approved before you start home shopping. That means a loan officer has pulled your credit and looked at your financial documents. Then the lender will give you a “conditional loan commitment letter” — meaning you are approved with only the caveat that the home must appraise for the purchase price.

This means you are almost as good as a “cash buyer” — subject only to the appraisal and terms of the contract. An aggressive buyer can agree to pay cash for the difference if the home doesn't appraise for the full purchase price.

Second, Struthers says that, given the trend toward higher rates, you'll want to make sure your lender offers a “lock-andshop” program. That is, you should have your rate locked in when you get the loan commitment. But if rates should drop before you close, make sure your lender commitment allows a renegotiation option.

And third, Struthers recommends adding an escalation clause to your offer in the case of multiple bids. That means the price you offer also includes an amount to which you're willing to escalate in a bidding war. You can either commit to a top price or agree to match or exceed the highest bidder by a certain dollar amount.

Finally, keep in mind that most mortgage deals in this tight market are set to close within 15 or 20 days — a very short time frame. However, Struthers says, it is common for the deal to include an agreement for the seller to “rent back” the home for an additional period of time for the buyers per-day mortgage cost. This allows time to organize the actual move on the part of both seller and buyer.

One last caveat: Forget making an offer with the sale of your current home as a contingency. It will knock you out of a deal.

It was only a decade ago that Americans were being foreclosed in record numbers. Now homes are viewed as a good hedge against inflation. And that's The Savage Truth.