Should you refi now or wait?
Thousands of homeowners who purchased a house within the last couple of years are itching for lower interest rates.
And if you are among them, forced to take on a mortgage with a 7% or close to 8% rate, you’re probably considering refinancing. So with rates now around 6.5% and falling, should you refinance now or wait for even lower rates?
Mortgage broker Paul Luck of McKinley Mortgage says he’s busier than he’s been in two years.
“We have a lot of customers calling us to do a refinance,” he said.
“When you go from an almost 8% rate down to six and a quarter, you are saving a lot of money,” he said.
Audrey Fuller is one homeowner paying a higher rate and hoping to refinance her condo to lower her monthly payments.
“I would like to see them under five, go back to under five,” she said.
“It would be like a $200 savings,” she said,” every month.”
What to know before you refinance
But if you are considering a refi, don’t forget expenses such as the application fee, appraisal fee and credit report fee.
Finance company Freddie Mac says the average closing costs on a refinance are about $5,000, while the site Investopedia says plan to pay between 2% and 6% of the loan amount.
Another thing to think about: Danielle Hale with Realtor.com says consider how much longer you’ll be in the home.
“The longer you’re there, the more you get to reap the benefits of those savings,” she said. “But if you’re planning to move over the next few years, then it might not make as much sense to refinance.”
She says to use an online mortgage or refinance calculator to see if refinancing will save you money.
“But it is a bit of a balancing act,” she said. “No one knows exactly where mortgage rates are going to be.”
Lastly, an independent broker like Luck can price multiple lenders.
So should you refi now, or wait till November or December when rates might be lower? It’s a dilemma because there are signs the Federal Reserve could cut federal interest rates as soon as September. Luck says no one has the perfect answer.
“That’s a good question,” he said. “I always say take the bird in hand. Can you predict the future?”
That way you don’t waste your money.
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