Blog entry: Should I Wait To Refinance?

Brett from Ridgefield, CT asks:  I would like to refinance my loan but I would like to try to time it right.  Is now the time to refinance, or do you see rates going lower in 2009?  I keep hearing reports that rates are the lowest they've ever been and now is the time to apply but I am also hearing from friends that it would probably make more sense to hold off until 2009, as rates may go even lower.  What is your opinion?

Brett D.

Ridgefield, CT

Thanks for your question Brett and Happy Holidays to you and yours! 

You pose a great question that many are asking these days.  The media has made homeowners aware of the extremely low mortgage rate environment and now truly is a fantastic time to consider refinancing or buying a new home.  It is true that mortgage rates are at all time, historic lows.  The honest answer to the question of whether rates will go much lower is one that no one can answer with 100% certainty. 

The truth is, if you are happy with current mortgage rates - why not take advantage of them now and refinance your loan, provided you are realizing a real benefit from the transaction...? 

I think that everyone is aware of the current economic climate that we are presently facing in this country.  Lenders have gone back to a much more conservative approach to underwriting a mortgage loan file.  Which means that one must show a decent credity history, job stability, evidence of income, and assets in some cases. 

I'm not sure of your employment/career situation, but it's important to remember the unsettling news that many financial experts are predicting that the 2009 recessionary environment will likely bring more and more job layoffs. What this ultimately means is that many homeowners may no longer be able to qualify for a mortgage loan if they are laid off from their jobs.  This is all the more reason to refinance now.  The truth is, regardless of our individual financial situations - each of us could probably benefit from some extra cash flow in our pockets each month in the current economy that we live in. 

I am of the mindset that if you are able to, it makes sense to take advantage of the current low rate environment now.  You can lock in your rate now and if rates do happen to trend downward slightly - your lender may be able to offer you a "float down" option that can be executed (if rates should fall) prior to your settlement date.

Should rates go much lower, you could always refinance again provided that the benefit was there.  Also of note is the fact that some lenders offer "no cost" refinance options where the lender fees for refinancing the loan are waived.

Hope this helps!  Thanks for your question and Happy Holidays!

T. Stafford