When interest rates go down, you can get the best deals on mortgage refinancing, but does this always happen?
Key and lock
In August of 2007, the interest rates on mortgages went down for four weeks in a row. If you had been waiting to lock in your mortgage refinance loan's interest rate, now was the best time to do it. Keep in mind that the market will always change, and there is no one best interest rate for mortgage refinancing.
If you're a home buyer who has already bought a house, you're just in time to take advantage of the lock. With the best mortgage refinance interest rate, you could have saved as much as 5.81%. This is.53% less than last year's average high, which was 6.34%. The borrowers got lucky by locking in their interest rates at the right time, and if luck is on your side, you might be next. During the first 30-45 days of your mortgage refinance loan, you could lock in a low interest rate, only to find a much lower rate the next month. At the moment, the trend is going down, but market analysts think it will go up in a year.
What good does it do to lock in?
A rate lock makes sure that the borrower's mortgage will have a set interest rate, points, and other fees. If you didn't buy your new home during that time, you'll have to pay the higher interest rate when it goes up. Then, borrowers are told not to lock in the loan right away if they haven't found a house after a week. They should know that the 30-45 days given are enough time for more processing, unforeseen circumstances, and some settlements, so take your time before you lock in.
There are lenders who will automatically extend the lock, which is good news. But some companies charge a fee to extend the period, and the costs to lock in the rate are not all the same. The fees are either paid up front or added to the interest rate of the loan. The longer the lock period, the higher the fees will be.
Get the agreement to lock in writing to protect your own interests. A verbal one might not hold up in court, and you won't have any proof to show. For the lock contract, write down all the details. The document should also be clear about the first lock date, the length of the lock, the cost and fees of the lock, and the post-lock details. At best, most documents have the interest rate and points. When things don't look good, mortgage refinance companies will also let you lock your application.
Want the best deals on mortgage refinancing?
You're looking for the best mortgage refinance deal because you want to save money. So check out what the different lending companies have to offer. Do the math before you sign the loan application. Even though some lenders may advertise low interest rates, they may come up with nasty surprises.
Imagine that your current debts are costing you 20% of your income every year. The best mortgage refinance package will only cost you 6% if you know how to get through all the jargon and numbers. Hire a money counsellor to help you find your way. Who says you have to do it on your own?
