If you’ve been planning to refinance your mortgage for some time now, you shouldn’t put it off any longer. Mortgage rates are at their highest level all year, and consumers can now get about 4 percent on a 30-year fixed mortgage. As home prices continue to rise, home buyers with the equity necessary to qualify should consider buying right away. Any consumer who wants to purchase a home should see the value in buying now, even considering the slight increase in prices. It’s best to just stay aware of opportunities and be ready to take advantage of any great one that comes up. As soon as the contract’s signed, it’s time to lock in a rate and get started.
Why Consumers Should Get Started Now
According to many analysts, rates are likely to keep increasing. Initially, the rise might not be too significant, but interest rates can change quickly and unexpectedly. Instead of getting nervous about changes, home buyers should remember how urgent the situation is. There’s definitely no lack of opportunity on the market. Considering that about 20 million existing mortgages are already above 4 percent, home buyers only need to ask themselves why they’re waiting. More consumers are now getting started again on the process of refinancing after having put it off at some time in the past. This includes plenty of home buyers in jobs dealing with finance who are already acquainted with the concept of refinancing. After locking rates in at 4 percent, home buyers can get started enjoying their investment right away.
Taking Chances in Today’s Market
Taking stock of the big picture is essential in long-term budgeting at home or at work. Retirement, college and other reasons for saving money require careful consideration and planning, and buying a home is no different. However, even with the low rates available, the best terms are always relative to what is currently being offered. It’s little wonder, then, that more customers are ending up unsatisfied after dealing with their mortgage brokers as rates continue to rise again. In some cases, home buyers have been so fanatical about getting a great rate that they started calling their mortgage brokers several times a day every day to check on rates.
Getting the Lowest Rate
At present, consumers who want to get a rate under 4 percent might have to take more money out of their savings bank and put it on the table. It’s sometimes possible to get lenders to adjust 1 percent of the amount of a loan in order to take a 4-percent rate down to 3.75. In the long term, however, more money can be saved with higher rates. Of course, many people will find that they don’t qualify for a rate as low as the one enjoyed by their neighbors. This might bother potential home buyers, but there’s no good reason to make this comparison, because different deals will work better for different financial situations. In many cases, the best rate can be found by simply shopping around.
Time to Lock In
If you’re just getting started on the home-buying process at this time, you might want to think about the amount of time for which you want to lock in your rate. 30 and 90 days are the most common increments when extensions are considered, but either might be priced differently at different lenders. When lenders extend the opportunity to refinance or purchase a home without any fee, some mortgage brokers will offer a 60-day lock as well.
Working with Lenders
Some consumers are concerned that their paperwork might not be processed in time. In these cases, it might be best to look at extensions or a 90-day lock, which might cost an eighth or quarter point from a lender. This means that a chance is being taken because if at the end of the 90 days the homebuyer isn’t prepared to close, the current rates will have to be used. Nowadays, they might have risen significantly. To reduce risks of having higher costs at closing, home buyers should go with lenders that offer a float-down policy. This makes it possible for consumers to change their rates if they decrease during this time. However, lenders won’t generally mention this opportunity, so consumers should ask about it. Some lenders do charge for this service.
Refinance Now or Later?
Consumers who aren’t sure whether to refinance should go ahead and have it done, according to experts. If rates do go down further later, it will most likely be simple to just refinance again. In many cases, lenders will do refinancing at no cost to the consumer. In case rates go down at some point, another cost-free refinance should take care of the matter with little problem. Many home buyers are already doing exactly this in order to save money in the long run. Some have already refinanced at least three times in order to keep enjoying lower rates as they become available. In case of lower rates, refinancing can be used yet again to seize major savings.
Derek is currently blogging for Garden Savings, a federal credit union located throughout New Jersey. He enjoys blogging about real estate, advice on renting, or how technology could be a real estate agents best friend. When he is not blogging, he enjoys relaxing with his girlfriend and friends.