You may have been thinking about refinancing your home for awhile, and if you’re a careful person, you’ve likely been patiently waiting for the perfect market conditions to make your move. Many experts are saying the time to refinance is right now, because rates are hitting unprecedented lows.
But homeowners should also be aware that, although striking while the refinancing rate iron is hot can get you a great deal, there are other factors at play which can reveal when the best time may be for you to refinance.
If you’ve compared your current rate with others you may have seen advertised in the paper or elsewhere, a lower advertised rate may make you want to go for it. But only when you make a closer comparison can you get the real story. Find out how much of a spread there is between your rate and the advertised rate. If it’s between 1.5 and 2, chances are good that refinancing will save you money and make your monthly payments lower.
Common Market Trends
You can actually predict when rates will nosedive. All you have to do is look for a sluggish economy, plus a struggling stock market. And if you read about upcoming lower rates following two successive meetings of the Federal Reserve Board Open Market Committee, it means those lower rates are definitely on their way. Other signs include rising Treasuries and investments occurring more in bonds than stocks.
Some say that fall is an optimal time of the year to refinance. This can be due to a few things. First, home purchases tend to be down during the fall due to kids returning to school. This slowdown in the mortgage industry, according to some can result in lower interest rates, making it prime time to refinance. You may also feel more flexible in the fall about leaving one company for another if you don’t feel that you’re getting the right service.
Refinancing in the fall can also be a great time if you are planning to significantly renovate your home. This is true for two reasons. First, your renovation costs can be rolled into your refinance. Second, starting your renovation project during this season could very well mean that it will be completed in time for nicer weather.
Refinancing a month before a big holiday such as December’s holiday season may be advantageous if cash is needed for gift purchases. By refinancing in November, the next month’s mortgage payment can be waived. If the extra money won’t be used for the holidays, a year-end contribution to your investment products can be made instead.
Other Low Rate Indicators
Of course, there is more to consider than just the time of year and low rates when you are thinking about refinancing. You will want to ensure that you’ve investigated as many lenders as possible in your neighborhood. You will also want to obtain quotes from as many of them as possible. Once you’ve gotten your hands on those quotes, take the time to go over each one. And always contact any company right away if you have questions about either their rates or their process.
Getting answers about refinancing terms only requires asking the right questions. For example, you will want to know about loan fees, along with items that are included in your new loan, such as property taxes. As well, you will want to make sure you understand how your short list of companies will deal with unexpected occurrences, such as when your home appraisal encounters problems.
Once you’ve been able to obtain the clarification you’re looking for and are satisfied that you have the right information to make an educated decision, then the refinancing process can begin.
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Guest author Tony Caro writes on a variety of topics, including the mortgage industry. He is a frequent contributor at http://www.refinancehomemortgageguide.com/, a site dedicated to helping consumers make the right decisions regarding refinancing their existing mortgage.