The Rule of Thumb For
Rate Locks and Refinancing?
There IS No Rule of Thumb
Currently, I'm working with a young couple obtaining financing for a newly constructed home (started the process in February this year). Last week, we reached the important step in their financing of "locking-in" their loan interest rate, as the home is nearing completion.
At the time their mortgage application was taken, I quoted what that day's going rate was for their financing. Because the markets had been moving up and down somewhat erratically at that time, I'd advised that we monitor them for a while and bide our time regarding a rate lock-in.
Why? I felt the likelihood of catching a lower rate during a downturn was good ... especially since we "had time" while the house was being built. My clients agreed. We decided to remain patient.
Our patience paid off, as I was able to lock-in my client's interest rate at 1/2% lower than the rate they had originally reported as a goal. That 1/2% represented real savings for them and they were thrilled.
Now this couple can happily relate the benefits they'll receive from locking-in their mortgage rate. They'll reap savings with each monthly payment. Not bad!
Old "rules of thumb" no longer exist for Refinancing either. Low or dropping interest rates don't ensure a Refinance is right for you. No, these days, finding benefit (or not) is to be found in a "recipe" of nuanced items.
Years ago, the "rule of thumb" regarding Refinancing was very simple. It completely revolved around interest rates.
What was the old "rule of thumb"? If you'd realize a 1% (or more) drop in your interest rate, it was smart to Refinance.
Today? You need to gather and analyze many more things prior to making a decision regarding Refinancing.
What are some of those things you should take into consideration?
- What is your present interest rate?
- How many years are left on your present mortgage?
- How long do you plan on staying in your present home?
- What other debt(s) do you have?
- What type of mortgage do you presently have?
- What would be your "break even point" for a new Refinance?
- What are you present Credit Scores?
- More ...
Each of the questions above will contribute to the overall analysis. Each will help define a final answer or solution. Each will help reveal a path of action.
The answers are specific only to the individual asking them. The answers are found within their overall financial scenario. The answers are also dependent on the future plans they hold.
Because Truth is: A "rule of thumb" for Refinancing and locking-in rates just doesn't exist any longer. Each homeowner must avoid making comparisons to anyone else. Each homeowner must seek and find the answers ... solutions ... and subsequent course of action specific to them.
What's the best way to accomplish this? Talk with a Lender. In Chicagoland (Illinois and Wisconsin), that's me.
Together, we'll analyze your present financial scenario and all options available to you. We'll discover if Refinancing is the best financial course of action for you at this time. Then we'll initiate a plan of action to help and assist you in successfully completing your goals, no matter what they are.
Consider that plan of action your personal "rule of thumb", tailor-made to fit you and only you ...
* Hoping to Buy or Refinance a home in Chicago or elsewhere in the Chicagoland area? Contact me! I'll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
I can be easily found at:
Gene Mundt
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed
American Portfolio Mortgage Corp.
NMLS #175656
Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
Gene Mundt, Mortgage Originator, an Originator with 37 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including: The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL & WI.
Referrals are Welcomed!
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