Time To Refinance Mortgage Again

Is it time to refinance your mortgage again, even if you have recently refinanced? Maybe.

Q: I was listening to your radio show on Sunday and after what you said about your mortgage, I’m thinking I should refinance again.

My house appraised at about $400,000, and my mortgage balance is about half that on a 15-year loan at 4.375 percent. I’m a couple of years into that loan, so maybe I have 13 years left.

I heard you say you refinanced your 15-year mortgage and continued to pay your current payment. I plan to stay in the house for at least 5 more years. I just heard Kudlow on CNBC say that rates have not bottomed out!

So I’m thinking I should look at refinancing again. Do you think I should refinance and can you recommend a good lender?

A: We don’t make recommendations on mortgage lender. Since this is a national column, it would be difficult to stay on top of everyone’s credentials. But to find a great lender, you should talk to at least one national mortgage lender, one local lender, a credit union and a mortgage broker. Ask your friends who they have used (and if they had a good experience with that person and company) and give them a call as well.

Your one advantage in finding a lender to refinance your loan at this time is that you have a great rate on your current loan and if the lender you decide to work with fails to come through, you can move on to another lender quickly.

Unlike when you are trying to buy a home, your only pressure at this time is finding the right interest rate and closing on that interest rate as soon as possible to take advantage of the reduced rate.

While there are so-called “experts” out there who believe that interest rates may not have bottomed out, we decided to refinance our home loan to take advantage of the lower rate. We might have gotten a lower rate, but we felt that the terms offered by our mortgage lender and the costs we were being charged were an excellent deal.

Currently it appears that you might be able to lower your interest rate by about one full percentage point. And if that’s the case and the costs to refinance are low, you can immediately take advantage of that lower rate now. If rates go down further, you can always consider refinancing again.

As a general rule, we try not to time the market – that’s how you miss getting a great rate. Here’s how it has worked for out for us: We thought mortgage interest rates had bottomed out a couple of years ago when we started to see 30-year mortgage rates under 5 percent and thought the same thing when rates dropped another half percent and again when they reached 4 percent.

If we had waited until mortgage interest rates bottomed out, I’d still be waiting and I’d have missed reducing the interest rate on my loan twice in the past three years.

Each time we refinanced, we worked with a lender who offered competitive costs and at times decided to take an interest rate that might have been a bit above the market but allowed the mortgage broker to offset the costs involved in the refinancing with the mortgage broker contribution to those costs.

The net effect was that our mortgage interest rate might have been a tad higher but we paid little to refinance and we saved money from the day we closed. We found that to be a win-win situation for us.

Also, we decided to continue paying what we were previously paying on our mortgage payments to effectively keep the same end date in mind for when we would be debt free on our home. For those of you keeping track at home, that means we will pay off our home in roughly 11 or 12 years.

Write us and tell us what you decide to do and how it goes.


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