There are many reasons why borrowers decide to refinance their homes. One main reason is to reduce interest costs with a lower mortgage interest rate. Though homeowners will have to pay these costs upfront, in the long run a refinance with a lower interest rate is likely to save more money. Overall, when refinancing for a lower interest rate, the main deciding factor is if savings on interest will be greater than the total refinance costs and prepayment penalties. Homeowners will need to calculate the total cost of refinancing their home to decide if it is the best option.

Homeowners can also use online mortgage calculators to get a better estimate of how much they can save by refinancing. However, online mortgage calculators usually do not take into account all the costs incurred with a mortgage refinance.

This results in a single loan and loan payments that can be stretched over a long term. Homeowners are also advised to see if there are any stipulations or requirements set by their lender prior to refinancing their home. Meaning the banks can borrow money at a lower rate, but NOT consumers. You will not benefit from this rate change. This does nothing to lower mortgage interest rates. NOR does it help people with sub prime adjustible rate mortages. Again, it only means that banks can borrow money cheaper. Thus, buying back bonds by the federal government will lower mortgage interest rates. The ratio of buying to selling of course tells the whole story, other than the cumulative effect of inflation.

But inflation tends to make investors more insistent on having higher interest rates. Governments have to pay more interest to get money away from mortgage markets.

Mortgage markets then have to pay more interest to get money back. So, returning to our start, we see that inflation is a primary driver of interest rates. This will weigh in on increasing interest rates. USA has elevated inflation, weak dollar, government selling more bonds than it redeems, so all trend setters are to higher interest rates for mortgages. The other side, lenders are asking for more money down, so taking less risk. These are unconnected events, as painful as it is, except in a political sense. The Fed deals primarily in short term interest rates. Those interest rates reflect only a narrow segment of the credit markets, albeit one of the most active. Mortgage interest rates are part of the long term market and while it is not immune to FED policy, those rates are much stickier and change much more slowly. Adjustable interest rate mortgages are a different case.

Home Mortgage rates have been much higher than this in the past, well into the double digits at one point during the Volcker regime. You were fortunate to see a 10 percent rate.

The Bear didnt do home loans or anything else that affected ordinary people. Your argument on lower rates causing inflation and a weaker dollar are to a considerable degree incorrect as a cause of the problem today.

But there is a linkage which Ill explain. The dollar has been dropping like a rock since early in the Bush administration. Fed rate policy and resulted by a deliberate policy of a weak dollar, which is traditional for modern era Republican administrations which have generated enormous deficits beginning with Richard Nixon. Nixon broke the fixed currency policy of Bretton Woods and floated the dollar rather than admit that his administration had destroyed its value.

He had to abolish the gold standard entirely because the world was awash in dollars. In order to finance the staggering expense of his war in Iraq, Bush has been resorting to selling US debt to other countries, most notably China. Fed to accommodate Bush has allowed M3, which is no longer officially calculated to go up like a rocket. Wars only have two certainties.

Given that inflation is a form of taxation, its already here. Deferred debt is also a tax.

Almost none of this has anything to do with our troops in Iraq. Theyre just getting screwed another way. Bush pursued was a bit like the guy whos running out of gas who speeds up so hell get to the gas station sooner. The faster he goes, the bigger a leak becomes. What were looking at now is a real mess. Were been stimulating the economy with borrowed money. Thats called stagflation and its a phenomena that happens rarely. Nixon was the last president to get us into that. There was concern that we would have difficulty getting out of it. When stagflation occurs,the Feds normal tools are less effective. The concern is that they could be completely neutered. That can happen if actual interest rates go below zero percent.

Traditional stimulus doesnt work, people are already being paid to take money. The liquidity trap occurs in deflationary times which we havent seen in this mess.

But there is a liquidity crisis. All those bad home loans and the collapse of housing prices in too many places is undercutting the American economy. This could get much worse before it gets better which is why youre seeing some panicked Washington officials. What is funny is that Bush has taken a conventional Keynesian approach in the past few weeks to deal with the slump, but with goodies for his friends.

The newest package of regulation and concern is long overdue. The irony is that the New Deal established a special home loan agency deal with a very similar liquidity problem in 1933. People were losing their homes and so many did that it destroyed the credit markets. FDR proposed a special organization which took over most of the troubled loans, wrote off some and renegotiated others.

The deal in effect was that he saved the banks from themselves and saved the homes for homeowners being destroyed by incoherent credit markets. Oddly enough, the agency made a profit from the loans banks considered uncollectible. To sum up, we have had inflation and a collapsing dollar, but it previously was due entirely to Bush economic policies. Bernanke is deliberately taking a chance in lower interest rates at a time inflation is picking up and the dollar is reaching new lows. This administration is not only incompetent. It is a complete and utter disaster and we can only hope to find our way back to a fiscally sound government.

It was only 8 years ago that we had what Greenspan called the Goldilocks economy and our biggest concern was possible deflation. Its going to destroy businesses like mine and thats just going to make it worse.

When the economy goes into a recession that means that the economic outlook for the country is bleak. Consumers stop spending, businesses lay off employees or go out of business and the economy grows weaker. In an attempt to spur the economy, the Federal Government lowers interest rates. Step1 Apply for a mortgage and purchase a home if you do not already own one. Take advantage of the low interest rate. Be sure to get a fixed rate mortgage so when the recession ends and interest rates go back up, your mortgage rate stays the same. Step2 Refinance your existing mortgage to a newer low rate mortgage. Again, be sure to lock into a fixed rate mortgage so you continue to receive the low interest rate for the entire life of the mortgage.

Step3 Ignore all loan offers that come in offering a variable interest rate. When interest rates are at all time low during a recession, they have nowhere to go but up. Step4 Call the customer service office of each of your credit cards and other lenders. Ask them to adjust your interest rate to the lowest possible rate available. Tell them if they can not do better on the rate, you plan to close the account and take your business elsewhere. Step5 Take a new credit card offer or apply for a new loan at a lower interest rate.