How do you know whether it’s time to refinance? Here are the factors to consider.
Is now a good time to refinance? Let’s dive into the factors that determine the answer to that question.
The first is the difference between your current rate and what it would be if you refinanced. The rule of thumb is that you should gain at least a half of a point.
The second factor is how far you’re already into your existing mortgage balance. If you’re, say, 20 years into your amortization schedule, changing your rate now won’t have much of an effect because so much of your payment is going toward your principal.
Lastly, how big is your mortgage balance? Have you crossed from a jumbo to a standard threshold? That can make a difference in your rate. Due to that change in percentage, the larger the mortgage balance, the larger your savings.
At 1:25 in the video, I’ve provided a chart that shows the fluctuations of mortgage rates and the 10-year treasury note for the past 47 years. As you can see, each one mirrors the other, so a great trick to forecasting the future of mortgage rates is to check what’s happening with the 10-year Treasury note.
If you’d like to talk more about whether now’s the time for you to refinance, give me a call. My team and I help people buy and sell homes, but we’re also economic consultants for the real estate market, and we know plenty of lenders and title companies who can help you.