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Lenders Can't Predict the Future, and Neither Can You.

If rates aren't that low, then check out their history and see whether they are in fact on the upswing, staying the same, or potentially going down. This can be hard to do, but it can be done.

Back in the late 1990s, when it seemed as if low rates were setting records every day, many people chose ARMs. Instead of taking a fixed rate in the 7 percent range, which at the time seemed low, some consumers chose an ARM. What happened was that those consumers actually watched their mortgage rate drop and drop and drop.

Personally, I got a mortgage rate in the low 7 percent range in 1998. At the time, rates were at lows that had not been seen for years. So I locked this in with a 30-year loan. A couple of years later, I refinanced into another fixed-rate loan, this time at 6.25 percent. Finally, in 2003, I refinanced one more time and secured a 5.00 percent 30-year fixed rate, which I'm still enjoying today.

At the same time, others were enjoying watching their mortgage payments actually fall automatically, without the associated costs of refinancing. Rates seemed to be at relative lows in 1998, so most people took fixed rates. However, others took ARMs, and it was the people who had ARMs who finished in the money.

Was a 7.00 percent rate bad? Of course not. Historically, it was a great rate. Heck, I'm in the business, right? If I had thought that rates were going to continue to go down, I might have chosen an ARM.

A couple of years later, rates went down further still—to unheard-of fixed rates in the low 6.00 percent range . What did I do? I locked in that rate, of course. After all, rates couldn't get any lower than that, could they? If I had thought they were going to go down from 6.00 percent, I would have either waited and not refinanced or taken an ARM.

I assumed that rates couldn't get much lower. They did. This time, I got another fixed rate. The point is that no one can tell what rates are going to do, so you have to make a prudent decision based upon historical evidence, advice from your loan officer, and anywhere else that you can get a whiff of where rates are going.

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