Mortgage rates fall again this week, at 3.94 percent

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POSTED: Thursday, October 6, 2011 - 4:41pm

UPDATED: Friday, October 7, 2011 - 1:50pm

The news about American finances hasn't been so great for a long time.

But right now for home buyers, or for those who are looking to save some money in the long run, this may be a good time to see your mortgage lender.

The national average rate on a 30-year fixed mortgage fell to 3.94 percent this week.

That's the lowest rate recorded in history, down from last week's low of 4.01 percent.

Gary and Judy Frederick retired to their Tyler home about three-and-a-half years ago.

When mortgage rates started dropping about a year ago, they jumped at the chance to take advantage.

"My way of thinking, with things going up such as gasoline and groceries, why wouldn't' you want to at least explore that opportunity?" Judy Frederick said.

Now, with rates dropping even more, they are looking into refinancing again.

"For a lot of people that purchased even a few years ago, these are phenomenal rates that are near all time historic lows, that we will likely not see again for probably decades," said Kelvin Woodfin, broker owner at Tyler Lending Financial.

So what drives the rates so low?

"When we see the stock market down, especially down several days in a row, on average it creates an improvement in rates," Woodfin said.

The east Texas average Thursday on a 30-year fixed plan is actually at 3.875 percent, slightly below the new national average. The 15-year rate is at about 3.25.

Woodfin crunched some numbers to put it all into perspective, on a $200,000 loan started about two years ago, at a 30-year fixed rate of 5.5 percent:

"Assume they would be refinancing that existing principal balance if on today's rate at a 30-year, 3.875 percent rate, their payment could be over 200 dollars less a month," Woodfin said. "...which would result in savings over the life of that 30-year loan of almost $80,000.

Or ... if that family wanted to refinance over a 15-year fix at the new 3.25 percent rate, the monthly payment would go up about $230 a month, but it would be paid off in about half the time.

For those who qualify, it's an extraordinary opportunity.

"The rates that we're taking about would be someone with low-to-mid 700s credit score loan, and a to value-to-loan balance, meaning their loan balance in comparison to the value of their home, at around 90 percent.

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When weighing the difference between an FHA-insured loan and a conventional mortgage, homeowners should also consider the future of home prices and mortgage rates, check the "123 Refi" page for more

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