Brook Benton
There always seems to be a lot of noise about mortgage rates. News reports track increasing or decreasing rates. Likewise, you probably get blasted with emails or other marketing about some amazing rate that ostensibly should not be passed up. With such in mind, here are four important things to know about mortgage rates and when to refinance your loan.
Think about ongoing “mortgage management.” You have a financial advisor managing your money, right? You should have a mortgage professional managing your largest debt – your mortgage. You most likely got your mortgage loan through a bank or mortgage broker when you purchased your home. If they are not still actively helping you, establish a relationship with a mortgage loan professional who checks in with you from time to time and lets you know what the latest news may mean to you.
For this and other reasons, they should touch base with you at least once a year. They should know you and what goals you have. Is the lowest payment most important? Is paying off your loan as soon as possible your goal? Whatever it is, your mortgage professional should know about it so they can monitor the market and contact you about any opportunities. Of course you should be able to check with them with questions, but the onus should really be on them to keep you informed.
Don’t try and be the rate expert. Realize that rates can move up or down quickly and that perception and reality of where they are do not always meet. Mortgage rates change daily and, depending on the market, can adjust multiple times in one day. So, depending on the source and perspective, articles and promotions about rates can also be old news by the time you read them.
In addition to knowing your goals and needs, your mortgage pro should have you prepared — from setting expectations to ensuring you know what paperwork you would need to muster — so they can help you act very quickly to secure a rate for you when the timing is right.
Understand the cost of a potential re-fi. Your mortgage pro also should be able to offer you refinancing options through which you incur no cost or lose any equity in your home. For example, you may have paid closing costs when you purchased your home. Still, your mortgage is a valuable asset to a lender and you will pay thousands of dollars in interest over the life of a loan. Lenders may be willing to pay your closing costs for the right to earn that interest. Rely on your mortgage pro to provide several options when looking to refinance. A “no-cost” or low-cost solution may be among the options they can offer you.
Finally, it bears repeating: If it sounds too good to be true, it typically is. As consumers we are always on our computer, phone or tablet. So, when you see some incredibly low rate being advertised, you should realize what they want. It piques your interest so you click on it or call the number provided. More often than not, these amazing rates come with significant fees and closing costs. Again, this is why you need a trusted advisor to help filter such offerings.
With these four things in mind, you should be better able to know when the time is right to refinance your mortgage.
