Summary
Interest rates are so low that now is the time to refinance everything and deal with China! If you have any debt whatsoever refinance it now. This might be a once-in-a-lifetime opportunity.

–          Your home mortgage and all credit card debt

–          New methods for a mortgage/refinance – completely on-line

–          REFINANCE THE NATIONAL DEBT

–          Easy way to deal with China

Home mortgages with interest rates 4.5% or higher should be refinanced. The outright savings can be a few hundred dollars a month. Today in Florida you can get a 3.5% refinance rate.

Take a look at the following chart:

This is why I say it is a life-time opportunity. I’m 71 years old and bought my 1st house in 1972 at the age of 24, I’ve never seen a 3.5% or lower interest rate. This is historic and won’t last forever.

Now, regarding credit cards and any type of loan, including student loan balances, pay them off.  These rates, in general, do not change. If you have equity built up in your home, refinance it and take out cash to pay off all higher interest rate loans/credit cards. Make sure you keep from ever running up expensive debt. Do not use the extra cash for vacations or just buying stuff. By doing this you will make a meaningful improvement to your cash flow and financial well-being.

New Mortgage Options. There are new companies that offer complete on-line low fee refinancing, the best known is Better.com. There are no commissions and have a very efficient process. When you apply online for the 3-minute basic pre-approval, they will ask for your social security number and do a secure “soft” credit check. This doesn’t affect your credit score in any way. They use your FICO Classic 04 credit score from Transunion. Knowing your credit score helps them make more accurate calculations about how much you can afford. If you have good credit and complete all of the requirements you can lock in your mortgage rate on the SAME DAY. It pays to check their site every day, the rates can change daily. Furthermore, with this new service you can close on a refinance easily within 30 days. They actually have a notary/real estate agent come to your house to sign all of the documents. No more meeting at some title company.

The Government should REFINANCE THE NATIONAL DEBT. The US currently has about $17 trillion in public debt. Doing this could save BILLIONS A MONTH. By “taking out new low interest loans” we can pay off our current liabilities. Right now the short-term bonds/notes are roughly the same as longer-term ones.

Here is the history of 10 year Treasury Notes:

The US can issue very long dated bonds, like 50 or even 100 year bonds at low, locked in rates. Obviously, over the next 50+ years interest rates will rise again. The CBO estimates that for every percentage point reduction in interest rates the US would save about $1.7 trillion over a decade! This would be a huge debt reduction and pretty much painless to the economy.

Easy way to deal with China. There is a really easy way to deal with China, who holds the 2nd most US debt, just behind Japan. Many people are concerned because China owns over $1.11 trillion of US debt, 27% of the $4.1 trillion in Treasury bills, notes, and bonds held by foreign countries. I’m not worried at all. First of all, China cannot just demand payment, these notes/bonds have redemption terms, if it’s a 10 year note, you can have your money back in 10 years. Secondly, China can try and sell these notes/bonds on the open market, but they aren’t exactly fools. These older notes/bonds carry much higher interest rates vs today’s negative rates in most other parts of the world. Besides, China needs lots of US dollars in their foreign reserve account.

HERE IS A SUGGESTION TO CHINA: Hi China, we’ll be calling all of our US debt that you hold, ever bit of it. No more 2 –  5% interest payments on that $1.1 trillion dollars. In addition, since you have been such a good trading partner with the US all of these years we’ll have our Treasury Dept print up a whole new batch of bills, just for you. We will save billions in interest payments, and it won’t cost us a single penny! You can take this $1.1 trillion and go buy negative yielding German Bunds!