If you’re teetering on the brink of a refinance but you’ve yet to move forward, it’s very likely it’s because you’re waiting for interest rates to go down a bit more. After all, if it does make sense to refinance now but rates might go down even further then you’ll save even more, right? But let’s step back a bit from the interest rate question or even looking into the future and dig a little deeper.
If your loan officer has suggested a refinance it’s because rates have fallen compared to what you now have, changing loan terms saves long term interest or you’re getting out of a hybrid or adjustable rate loan into the stability of a fixed. That means should you decide today to go ahead and tell your loan officer you’re ready to close the deal it will be a wise choice. Yet many are out there trying to make it wiser by waiting. Here’s our advice- Assume whatever you decide it will be the wrong decision. How’s that?
Let’s say that right now you would benefit from a refinance. So you tell your loan officer to lock in your rate and draw your closing papers. Then a few weeks later you notice rates have fallen. If only you had waited you could have gotten the lower rate. It’s not much lower, but lower still.
Now let’s say that you would benefit from a refinance and you decide to wait to see if rates go down.
Don’t depend upon your loan officer to tell you what to do in this situation, it’s really your decision to make. Okay, so you decide not to lock in right now but rates start to creep up. You’re checking on rates every day and your loan officer is giving you the bad news. It’s still good to refinance just not as good as it was a couple of weeks ago. You keep waiting, hoping rates will fall back to where they were. But they don’t. In fact, now they’re so high it no longer makes sense to refinance. The window has closed.
Okay, so which way would you rather be wrong? Locking your rate now and getting a good deal or waiting and rates rise and never look back? We thought so. No one knows where rates are headed. No one. You can only deal with the facts in front of you. If you’ve got a refinance application approved right now, you may think about locking in.