The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
Timing the market and determining the best time to lock in your interest rate when refinancing your mortgage, well that’s a conundrum, isn’t it? As mortgage rates fluctuate just the way stock prices do, identifying the better-priced lender at any given point in time — with the specific credit parameters — can be quite a complicated process. Here’s how to navigate current refinancing rates so you secure the best deal.
If you have been thinking about refinancing your mortgage and missed the boat on lower mortgage rates during the past few months — don’t worry, you can still benefit. Rates are still low historically, even though the possibility of rates dropping below 4% on 30-year mortgages is unlikely. Unfortunately, the low rates we saw in March and April of 2013 will remain … history.
Consider the following when refinancing your mortgage:
The timing for when to lock in your refi rate depends on your goals, expectations and the property’s occupancy type (that is, whether you’re using it as a primary home, second home or investment property).
Things to consider for timing:
Locking in your interest rate upfront when you order the appraisal is certainly something most lenders can accommodate. The major risk here is if your valuation does not come in at what you precisely say it is — and if your loan to value changes, your interest rate could change.
If the loan to value is potentially anything 70% or more, it might make more sense to lock once the appraisal comes back. If it’s projected that the appraisal will absolutely show significant equity to the tune of 40% or more, other than market conditions (and high credit score), there is little risk to locking in the interest rate upfront.
To lock instantly when the appraisal comes in allows for little or no chance of change to your rate, payment, terms or costs.
By providing your mortgage company your interest rate lock preferences and any applicable pricing adjustments — such as discount points with those rates — you can allow your mortgage company to lock in your interest rate, with the expectation that they are watching the market proactively and are acting in your best interests. Allowing your loan officer to lock in your interest rate in lock step with market conditions provides an advantage over locking when the appraisal comes in, especially if by the time the appraisal comes in, the market has worsened (meaning rates rose). As the informed consumer, it’s important to understand that your rate and pricing preferences could be available when you’re not, so providing a range of lockable loan choices gives your mortgage company a sense of what pricing you expect.
Image: Jupiterimages
December 13, 2023
Mortgages