How Will I Know When It’s Time to Refinance?
One of the most common questions I get from homeowners is, "How will I know when it’s time to refinance?"
In the old days, the math was much easier. Your grandparents would probably tell us if rates were 2% better you should definitely refinance. And that made sense back then because loan amounts were so small. But in today’s world, with median home prices and average loan amounts in the $400k-$600k range, it just doesn’t take a massive move in the market to have a refinance make sense. You just want to make sure that your savings outweigh the costs.
I know when it’s time to refinance because we constantly monitor loan sizes, interest rates, credit scores, and equity positions. Then, we match that to where rates are and how they trade daily. And from time to time, triggers pop up where it makes sense for certain people.
Now it’s easier said than done. I do this all day and have many systems to help me connect the dots. Can you do this yourself? Absolutely. You can scroll through the Internet, read the Wall Street Journal, and look for movements in the market just like we do.
The interest rate market looks like a seismograph with rates going up and down and constantly moving. The question is, where does your mortgage stand to benefit from a refinance? Markets move so fast that when these opportunities come along, they don’t last long.
The question is, will you be able to take advantage of it? Prime example. This little occurrence happens frequently where rates improve .25% and reverse in a three-day period of time. Because we act fast, we can save clients thousands of dollars yearly in mortgage interest.
My rule is simple. If it saves you money and it’s free, you should refinance every time. But I was tricking you with this title that said how will I know when it’s time to refinance? You see, I think you shouldn’t have to know. I don’t recommend trying to follow all this yourself because markets move too fast. I recommend working with someone you can trust to help you understand all of this and jump on top of those opportunities as they come along because they don’t last long.