Today the Mortgage Bankers Association announced that mortgage applications hit an 8 year low last week. With uncertainty in the housing market, the credit market, and the economy in general, the conventional wisdom is to wait to buy a house. But is ‘wait and see’ the right strategy?

If you’re already planning to buy a house, you have lots of time to get a mortgage, but it’s probably in your best interest to lock in as soon as possible. Rates can change a lot in a few weeks. If you’re, say, 90 days from closing, waiting could cost you half a percentage point in your final payment (that could be tens of thousands of dollars over the life of the loan).

If rates fall in that period, you can always back out of your initial loan. And why wouldn’t you? The cost of renegotiating a mortgage is, at most, the cost of your application fee (in most cases, about $500). You’ll make back that cost in a few months. But if you wait until a week before closing to lock in a rate and rates go up, you’ll be left high and dry.

If you’re already a homeowner, refinancing may make a lot of sense right now. If, for example, you bought a home with a jumbo loan (or two loans) before the financial crises, you may be able to consolodate your loan into a much lower rate than you were paying only months ago. That’s because congress recently raised the limit for borrowing under the protection of a conventional, 30 year fixed loan.

With 20% down and good credit, you should be able to lock in a 30 year fixed rate near 5% for homes up to $650,000 in many neighborhooods.

If you’re living in an apartment and just holding out for the right time to buy, there are just too many unknowns right now to give any sensible advice. Home prices have fallen substantially, but they may fall even more with skyrocketing unemployment. On the other hand, congressional incentives for new home buyers and falling rates, home prices may have already bottomed out in most areas.

A good place to track mortgage rates, though, is Freddie Mac’s weekly survey. There you’ll find the latest rates nationwide. While these vary somewhat from area to area, the national rate is perhaps the best guide of the general direction of mortgage rates.