Should you Refinance Now or Wait for Rates to Drop?

Should you wait for the rates to drop further? You have missed the boat once again and didn’t take advantage of the low mortgage rates that were available a few weeks ago. Now you're in a dilemma whether you should consider refinancing at present or wait hopefully for the next downward trend. This is a very valid question.

Experts predict that home loan rates will now rise and wouldn’t go further down. However, some trends suggest that they could move downwards once again. With all these swings and different predictions, you can land up being totally indecisive regarding your course of action.

Handling Falling Rates After Lock In

The safest thing to do would be to go ahead and pursue a refinance if the rates are reasonable. This being done, continue keeping an eye on how rates are moving. There are many ways you can do this. To know the rate of a particular property, you can get a free online report at Neighborhood IQ.

It’s a good idea to lock in the available current rates, but make sure you ask for the provision of floating rates to be included.  This will keep you protected if the rates rise continuously. Along with that, you'll have an option to re-lock at a better rate, should rates "float" downward.

Next, you can simply go in for a regular lock-in of current rates and proceed with the usual mortgage application process. If the rates fall after you apply for the refinance, you can make an attempt to renegotiate for a lower rate.

Lock in a current rate now, and later if rates fall and your lender is not willing to negotiate before finalization, you can simply opt out. If you are sure of getting better rates with other lenders, you can move away and hunt for lower rates. This would mean you will not be able to re-apply to that lender in the future, but this doesn’t prevent you from getting approval from a different lender. This of course will happen only if your credit was not very marginal in the beginning itself and the first lender was amongst the few who were likely to approve your refinance application.

Walking out of a Mortgage Application

To get a rate locked in, you need to submit an application for the mortgage, and you might be required to keep a deposit or pay an application fee. This is not considered an actual commitment that you will take a mortgage with the lender on application approval. You are still free to walk out at any point of time until the loan is approved. However, walking out will result in losing your deposit or application fee, and that lender may refuse to entertain you for other loans in future.

Refinance approval

It generally takes between four to six weeks to get approval for a refinance; sometimes slightly longer in case of complex cases. Mortgage rates can change substantially within that period. You can breathe easier knowing that there are options available between the time of the application and when you sign actually sign your name on the dotted line.