Several weeks ago I was about to toss the daily delivery of junk mail into the trash when I noticed a piece from my local credit union. It said "refinance your mortgage at 3.5%". It was a special rate applicable in certain circumstances. This loan program seemed to fit my needs, but my first thought was this seems too good to be true. I decided to pay them a visit just to find the loophole. Happily, there were no loopholes. The entire refinancing process was completed in three weeks. No lawyers. No realtors.
Lower than expected closing costs of $1200 made the deal work. The more typical higher closing costs greatly hinder economic activity. New York leads the pack as it so often does when it comes to fees. You can see where your state ranks here.
My parents bought a house for about $7000 in 1952. Their mortgage rate was 3% or so, likely through the VA. The government was encouraging the great numbers of WWII vets to buy homes. Houses were springing up on Long Island like wildfire as waves of people abandoned the city. Anyway, the refinancing brought home the fact that we haven't had interest rates this low in a very long time. I was also reminded that despite the current debate about whether inflation or deflation is the greater economic threat, the real trend becomes clear once you look back more than a couple of years.
