By: Chris Klau
The following question is one that we get often at Quizzle.com, the free and easy way to manage your home, money and credit – all in one spot. To give you the best possible answer, we’ve brought in Home Loan Expert Chris Klau.
Chris has nearly 10 years of experience in the mortgage industry as Director of the Mortgage Insiders at Quicken Loans and works hard every day to provide trusted advice and home loan expertise to team members, friends and family, and external partner companies.
Q: I’ve been thinking about refinancing, but I think I’m going to wait until interest rates come down. Do you think that’s a good idea?
A: No one has the crystal ball to predict where rates will go, but when interest rates are historically low like they are now, you probably don’t stand to gain much by waiting. If you have a home loan program lined up that will save you money and has guaranteed benefits, I suggest taking action and securing that program.
Given the nature of the markets and the moves of the Federal Reserve, the odds of rates going down significantly are much smaller than the odds of rates potentially moving up significantly. You can roll the dice and gamble on snagging a slightly lower rate if you choose, but odds are against this happening.
Before you decide to wait, make sure you know what you’re risking. If you’re holding out for a 0.25 point lower interest rate, figure out how that translates to your monthly mortgage payment (or ask your trusted mortgage expert to do this for you). Often times, the point difference equates to a relatively small difference in your payment. When you analyze the risk-reward potential, you may find that waiting just isn’t worth it.
Keep in mind that mortgage guidelines are changing at a faster pace than ever before. The loan you qualify for today may not be available for you tomorrow. If you have the opportunity to secure something now that will improve your situation, take advantage of that opportunity!
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