Should I be telling clients to refinance now or wait and maybe they will get a lower 30 year rate when the economy gets weaker?

Asked by Robert Paul, Bedford, NY Fri Jul 9, 2010

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5
Dan Chase, Home Buyer, Texas City, TX
Fri Jul 9, 2010
Anything is possible.

The interest rates are at a 50 year low.

If your clients wait and interest rates go up (which is likely in the not to distant future) they potentially could lose a lot more than they could gain by waiting. Yes, they might get a slightly better rate if they wait, but is that possibility worth risking losing such absurdly low rates as we have today?
2 votes
Mack McCoy, Agent, Seattle, WA
Sat Jul 10, 2010
No.

For one thing, IF the economy gets weaker, they might be one of the casualties, in which case they will have wished that they had refinanced when they had a job.

The other thing is, you never know. Remember, we were just told that as soon as the Fed stopped buying mortgages, interest rates would go up.
1 vote
Dubbs, Home Buyer, Sherman, CT
Fri Jul 6, 2012
Holding out for lower rates now is like holding out for a higher selling price in summer 2006 (or 2005 since you dont know the timing)... you might do a little better... but you could do a LOT worse. If you have major debt (like a mortgage) and are able to refinance to significantly improve your rate (without too large of offsetting closing costs), you should do so now.

Interest rates are being artificially suppressed by Western central banks right now and, like anything artificially suppressed (or inflated), it will revert to the mean. Unless you think you can call the timing of the reversion, advise your properly positioned clients to take advantage of these suppressed rates (if they havent already).
0 votes
Ben Fox, Mortgage Broker Or Lender, Washington, DC
Tue Feb 1, 2011
Have them refinance at "no cost" if the prevailing rates would provide them a savings. The lender premiums that are paid toward closing costs come with a rate that is higher than what it is considered "par" or zero point rates but at the same time, it is a no lose proposition. If rates come down further as you are predicting, then they can refinance again because they didn't have to pay to do the first refinance. If rates go higher, you look like a hero for recommending this hedge.

I have had clients refinance "no cost" multiple times and it is a great way to save money without paying the fees for refinancing.
0 votes
Rudi Hofmann, Mortgage Broker Or Lender, El Segundo, CA
Sat Jul 10, 2010
Robert, I think you'll find that most of your past clients already have refinanced, if they still had an acceptable LTV. .... Happy funding, Rudi
0 votes
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