Whether you think Donald Trump is sane, crazy, presidential, or the biggest clown under the GOP tent, one thing everyone can agree on is that The Donald is the commander and chief of personal finance. And recently, he proved it yet again with insights that many homeowners wondering whether it’s time to refinance would do well to hear.
Donald Trump told CNBC "I love low interest rates," but for the good of the nation, rates should be higher.
“I’m just saying, at some point, you have to raise interest rates,” he said, referring to the fact that the Federal Reserve has been keeping rates low for too long. Trump predicted the Fed would be forced to raise interest rates after the next presidential election.
The Donald Was (Half) Right
Trump was dead on about the Fed having to raise interest rates, but he was off about when they’d do it: On December 16 2015, the Federal Reserve raised interest rates for the first time in almost a decade. The rate hike was a quarter percentage point – not enough to instill panic, but enough to make a good case for refinancing and locking in a low rate sooner rather than later.
One reason is that the raise in rates is likely only the first the Fed will. The Fed chair, Janet Yellen, suggested that a “gradual” increase in interest rates would follow. The next federal reserve meeting to discuss interest rates is scheduled for November 1-2. In fact, notes from the Federal Reserve’s last meeting on September 1 & 2 mention "some" of those at the meeting "judged that another increase in the federal funds rate was or would soon be warranted”.
The Good News: There’s Still Time to Lock in a Low Rate
Will interest rates go up after the next federal reserve meeting in November? Yes, say analysts. Are rates still historically low? Definitely. In fact, it’s still possible to get a 30-year-fixed-rate mortgage for under 4% APR.
So, if you have an adjustable rate mortgage (ARM) or have been considering lowering your existing fixed-rate mortgage, now is the time to act. With the Fed’s plan to gradually increase rates, your chance might not come again for many years.
The Bad News: Waiting Could Cost You
Even a modest jump in interest rates can have big consequences when applied to loans as large as home mortgages. For instance, consider the cost in waiting too long and having interest rates rise by a mere one percent.
The difference between a 30-year, fixed-rate mortgage of $250,000 at 4% APR and one at 5% APR is nearly $150 per month and more than $53,000 over the life of the loan. Even Trump would tell you that’s a decent chunk of change.
The Best News: How to Get the Best Rates
Fortunately, you don’t need Donald Trump to tell you where to get the best interest rates for purchasing a home, or refinancing an existing loan. Sites like LendingTree, one of the nation’s most respected loan comparison websites, help you shop rates to find the best mortgage. Lenders compete to win your business by giving you the best rate and terms, and you choose the loan you want.
It’s a painless, hassle-free way to refinance your home and start saving money before higher interest rates hit. Compare mortgage rates now… before it’s too late.