Both the White House and the Federal Reserve have announced that economic growth will slow down in 2008. Unemployment should tick up only slightly, but remain under 5 percent. But if you're watching where interest rates are going, the metric to watch is inflation.

The White House says inflation will remain under 2.5 percent. Earlier predictions were that inflation would be over 3 percent in 2008. If growth isn't outpaced by inflation, mortgage interest rates could drop further.

Why? Mortgage interest rates are tied to mortgage backed securities or mortgage bonds. They go up or down on the prospect of inflation.

You may have noticed that mortgage interest rates have fallen below 6 percent for conforming, fixed rate loans. That's because the government's predictions about a softening economy and less inflation have been priced into the market.

So is it time to lock in your rate? It's a good idea if you are in an adjustable rate loan and you want the security of fixed payments. If you're looking to buy, most locks are 30 days which will give you plenty of time to find a home.

If you're refinancing, here's how to tell if it's worth it.

One point is one percent in interest, so with every 1/8th of a point, you'll save about $25 on the average loan amount.You can do an equity loan and take some money out for home improvements. If you aren't sure of your equity position, you can try to do a Rate and Term refinance to roll what you currently owe into a new note.

But, your closing costs could run into the thousands of dollars with attorneys fees, loan fees, title insurance and so on. Ask your mortgage broker for a good faith estimate. You can use this to figure how soon the savings on your interest rate will pay back your closing costs. If your closing costs are $3,000 and it takes three years to pay it back, that's a good deal only if you plan to stay in your home another three years. If not, you're better off leaving your rate where it is.

Published: December 3, 2007

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.