How do I know when its time to refinance my mortgage?
I just bought a home last October. I signed a single 30 year mortgage for 280,000. My interest rate is 6.75%. I have only made 3 payments on this mortgage. With interest rates dropping when is a good time to refinance?
Tagged with: 30 year mortgage • good time • interest rate • interest rates
Filed under: Things To Consider When Refinancing
You must have heard about the Fed cutting the interest rates again today
The quick answer on refinance timing is that you are not required to wait any period of time before refinancing your current mortgage.
However, most home owners do wait until they have some equity in their homes before refinancing. When making loan decisions, one of the most important factors potential lenders review is the loan-to-value ratio, or LTV, of the proposed loan. This ratio compares the amount of the loan you are trying to obtain to the current value of your home. The interest rates charged on 100% loan-to-value refinance loans, are generally higher than the rates charged on loans with a with lower loan-to-value ratios (it’s intuitive, since they are riskier loans for the lender). However, if your credit score has increased significantly since you first purchased your home (or if your income has risen), you may be able to obtain a lower interest rate.
You should contact several potential lenders to discuss the loan terms they can offer you on a refinance loan. After speaking with several lenders, you should be able to determine whether or not a refinance loan is a financially viable option for you.
Another problem encountered by many borrowers trying to refinance their home loans are early refinance penalties charged by their current lenders. Many loan agreements, especially “sub-prime” loans designed for borrowers with credit problems, state that borrowers must pay a penalty to their current lender if they wish to refinance their loan before the expiration of a certain period defined by the loan agreement. These “penalty periods” vary from loan to loan, but are frequently between two to five years from the date of the original mortgage.
Before you attempt to refinance your current mortgage, you should contact your current lender to discuss whether or not your current loan agreement includes a prepayment penalty, and if so, its amount and when you can refinance without penalty. These penalties can be quite costly, and can easily make a refinance loan too expensive to save you money over your previous loan. Again, you should find out the amount of the penalty, if any, on your current loan, then contact several potential refinance lenders to discuss whether or not a refinance loan is a practical solution for you.
you don’t have enough time into the mortgage - rates haven’t changed enough to benefit you - refinancing usually costs money up front, which could take years to recoup depending on how much you are saving each month after you refi
Unless you can get 2% or better on a refinance it’s not even worth it when you do the math and all of the associated costs involved.
6.75% is pretty good rate if you ask me as long as it is a fixed rate and not an adjustable rate.
The rates I do not believe will drop anymore, if abything they will be going up because this market cannot sustain its current path.
Good Luck
Talk to a mortgage broker.
The best way to find an experienced broker in your area is to fill out the form at http://www.MyMortgageSaver.com
Good Luck,
Jon