Refinancing In Order Now?

(CBS)  Mortgage rates are expected to drop in the aftermath of Washington's takeover of mortgage behemoths Fannie Mae and Freddie Mac. They dipped about a-quarter point Monday, the first day markets were open after the move was announced.

But will they fall enough to warrant homeowners refinancing their mortgages?

Probably not, says Stephanie AuWerter of SmartMoney.com.

"I think it's not time to refinance based on this news alone," AuWerter told Early Show co-anchor Maggie Rodriguez Tuesday. "Yes, we probably are going to see mortgage rates drop a bit ... but we aren't going to see them drop so much that we're going to see a huge rush for refinancing anytime soon."

The rule of thumb is that you should be able to lower your interest rate two points before considering refinancing -- or at least, a-point-and-three-quarters. And most analysts agree rates will probably only fall by half that based on the Fannie/Freddie changes alone.

"You also want to consider your cash flow," AuWerter continued. "You want to consider the fees. You want to consider what type of mortgage you have. So, there's a lot of moving parts in this scenario."

Those fees can be significant, she pointed out, stressing, "This transaction is not free, and it can be very deceptive, because, lots of times, what they'll do is, they'll fold the fees into the mortgage, so it feels very painless. So, what you need to do is know exactly what you are paying for this, and figure out how long it will take to recoup those costs. If you're not gonna be in the house for a very long time, then you probably aren't going to recoup these fees. So, do know what you're paying -- don't just fold it into the mortgage and not worry about it."

As for refinancing to switch to a fixed-rate loan from an adjustable, "If you can afford it, that can be a really great move. A big part of this big housing mess was caused by people who were in adjustable rate mortgages. Their rates went up, and they could no longer afford their home. So, a fixed-rate mortgage gives you that sense of security. It really is sort of the gold standard for mortgages. So, if you can afford the switch, it probably will help you sleep better at night.

What about jumbo mortgages (those over $417,000 in the continental U.S.)? "The jumbo rates probably aren't going to be affected that much by the Freddie and Fannie news. We are seeing them come down a little bit, but they aren't in that system, essentially, so they're in their kind of own universe. So, watch the rates and, if you see them come down, refinancing could make sense."

AuWerter says she doesn't think the federal bailout of Fannie and Freddie will spell the end of the housing crisis -- it's not going to disappear in the next month or so. The takeover is certainly a good step: It will shore up a lot of the problems long-term, because these two institutions will be much more stable. Not that this was a huge surprise, that the government is stepping in, but it makes us feel much more confident in these institutions and should result in much more stability in the market. However, it won't fix the economy overall or the housing market in particular.

"I don't think it's going to be a game-changer in the short-term ... (but) at least this will make for a friendlier environment. Lenders will be more willing to work with you, and that should make it easier to qualify and refinance. It should loosen things up a bit."