Low Mortgage Rate Refinance
Many have been waiting to refinance their mortgages to see if the interest rates will drop any further than we have seen in the last few months. As most already know, we have seen mortgage rates dip below 4.75 % in the US which is partly due to the housing crisis and poor economy. Many have been taking advantage of low mortgage rate refinance opportunities all across the nation, in some cases homeowners were able to reduce their home loans by as much as 3-4 points in which has amounted to literally tens of thousands of dollars in savings over the long run.
However it seems that the mortgage bonanza that so many people have been taking advantage of looks to end soon. At the time of this writing, interest rates have climbed past 5.75 % resulting in a drop in the mortgage market. Obviously those who have been holding right out in the hopes that the rates will drop even further may be kicking themselves right now.
Low Mortgage Rate Refinance
So the question remains, should you refinance now ?
This is always a tough decision to make. Many experts are saying that the rates will probably drop again in the near future, however probably not as much as we have seen in the past few months. So what should you do ? One way is to look at your current interest rate, if you are still at a 6.0 -6.5 then maybe you will want to make your move quickly in case the rates rise even higher. Sure they could always drop a point or so , however this is a chance you will have to take in which you could lose your window of opportunity at any time.
Low interest rates are not the only thing to consider when looking to refinancing your mortgage. As tempting a low interest rate may seem, there are other considerations at stake. One is how much of a penalty will you incur if you refinanced at a lower rate? Penalties are usually calculated by the amount of months that are left in the current mortgage term, the amount still owing, the difference between past and current mortgage rates and other complicated equations that total into the factor. It could be expected that your penalty could amount to as much as $ 15,000- $20,000 or more depending on the length of term left and the size of the loan.
One advantage you have is that due to the recent rise in interest rates, many mortgage lenders have seen their business drop substantially in the last couple of weeks, so this could be used to your advantage when trying to negotiate with them. You may be pleasantly surprised at what some mortgage brokers will allow in regards to giving you the best deal possible in lieu of their competition if they view you as a good potential client. So bring some of their competitors offers to the table and start bargaining as this is still a good time to renegotiate your mortgage.
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