There is a very common question I get from homeowners and that’s, 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 percent better you should definitely refinance. And that totally made sense back then because loan amounts were so small. But in today’s world, our loans are four, five, or six hundred thousand dollars. 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, loan to values, all those types of things. And then we match that to where rates are and how they trade on a daily basis. From time to time, triggers pop up where it makes sense for certain people to take advantage of a mortgage refinance.
Now it’s easier said than done. I do this all day, and I have many systems to help me connect the dots. Can you do this yourself? Absolutely. You can read the news, check out the Wall Street Journal and look for movements in the market just like we do.
But the tricky part is rates change every day. If you watch the video, you’ll see what the interest rate market looks like; rates going up and down and constantly moving. The question is, where does your mortgage stand to benefit from a refinance? Will you know when it’s time to pull the trigger and go through the process or will you miss it because markets move so quickly these days?
Over the years, I’ve experienced many times when mortgage rates dropped .50% to .75% in a matter of weeks. Because my team acts quickly, we proactively reach out to our past clients to save hundreds of thousands of dollars in annual mortgage interest! In most cases, it’s a complete surprise to our client as they didn’t realize rates had dropped. Many even forget what rate they had!
My rule is simple: If it saves you money and it’s free, you should refinance every time. But I was tricking you with the title, “How will I know when it’s time to refinance?” I personally think you shouldn’t have to know. I don’t recommend trying to follow all this yourself, because markets just 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.