Another Perfect Storm
We first ran this article in the June 2009 Edition of our newsletter. We are running it again because… at this point in time there is ANOTHER Perfect Storm!
A Refinancing Strategy for today’s volatile market
With the historic-low interest rates now available, many people are interested in refinancing to save money. The problem is (with most mortgages) the penalties are too high to make this a financially viable move.
In order for refinancing to make sense, you should end up with money in your pocket. The overall savings generated by a lower cost mortgage should be more than the refinancing penalties incurred.
As long as mortgage rates stay the same or get lower, it is highly unlikely that you will see any benefit to refinancing because of the high penalties … although there is a further benefit of having a fresh 5 year term as we cannot know what the rates will be when your current term comes up. One thing we are sure of is that rates will be HIGHER.
As mortgage rates go UP, the refinancing penalties go down.
IF you take action now you could benefit greatly when mortgage rates start to go up again. Currently, some lenders still have their 5 year fixed rates in the 3.79 – 3.89 range (see our rates page). These rates have never before been offered and may never again…in our lifetime.
What we do is get you the BEST rate we can and lock in the offer. Depending on the mortgage company we can lock in for 3 to 4 months and can often renew for another 3 to 4 months at a time. Then we wait. At some point the mortgage rates are going to go up again.
At the point where you are actually saving enough money to make the transaction worthwhile, we finalize your refinanced mortgage.
IN A NUTSHELL:
1. You lock in a rate-hold today via a pre-approval application while the interest is low.
2. You wait till the mortgage rates start to increase.
3. When the mortgage rates go UP, your penalty for refinancing goes DOWN.
4. When the transaction generates a positive cash savings for you … we refinance at the lower rate, with the lower penalty.
What do you need to do? Call us. We’ll let you know if this strategy makes sense for YOU!
