Planning When to Lock Into the Best Rate
Mortgage rates fluctuate with the economy, and choosing the right time to lock onto a refinance rate that works for you is a bit of a gamble. Before even making the decision to refinance, though, take a look at your options and goals. Ask yourself why you want to lock in on a lower mortgage rate. You have to decide if now is the right time, as well as what you stand to gain or lose by waiting. There are a few current issues to keep in mind to make the best decision.
Factoring In Your Credit Score
Although it may be a good time to refinance your mortgage based on the market, you should also take into account your own personal credit score. Every American is entitled to a free annual credit report, so check that before you start applying for loans. Guaranteeing an attractive rate also means that your credit is up to par, and weighing the timing of both the market and your own score is beneficial to securing the best rate you can get.
Interest Rates Based on the Market
In order to stimulate the economy during the recession, there were various government programs instituted that offered attractive incentives of low interest mortgage rates to homeowners. However, with the upturn of the economy, some of these options may be coming to an end. According to the BostonGlobe.com, long-term rates have increased more than half a percentage point since the beginning of May of this year. There has been such rapid consumer activity in locking in on the current low refinance rates that they can only continue to rise with the increased demand. Now might be the time to lock in on a good, low rate while you still can.
Refinancing to Cash Out
If you’re a homeowner, you can borrow against the equity of your home for a higher amount than you currently owe. By doing so, this can mean securing a lower interest rate and allowing access to hard cash for your pocket. This can be done for a variety of reasons, whether to pay off other types of debt with higher interest rates, or to cover or a major expense cost, like college or home improvements. The idea is that cash out refinancing frees up a chunk of change for you to do with what you will. Buyer beware, though, because often this type of refinancing comes with substantial fees and expenses that vary from state to state. However, as reported by the New York Times, in certain states like New York, borrowers that refinance aren’t required to pay the initial tax required for new mortgages again. Check the laws in your own locality to find out what types of fees you may be facing.
Before making the decision to refinance, look at your entire financial portfolio and weigh your options. Talking to your bank or financial advisor about the specifics of a refinance rate is necessary. Also make sure to compare rates. There are websites that provide borrowers a full view of what’s available. The market goes up and down, though, so don’t take too long to lock in on the best rates.