Home Loan Information Home Loan Information From A Former Industry Insider

Should I refinance now or wait?

Let me make this very simple: Today we know qualified borrowers can get a mortgage with interest rates in the mid to high 4% range. Historically the sustained low interest rates have been in the mid 5% range. It is virtually impossible, without subsidies, for interest rates to go lower than 4.5% because of the necessary profit margin to the lenders and their investors.

Ken Cook

My advice to anyone considering refinancing today who wants to be sure to take advantage of these truly historically low home loan rates is to do it today. If you wait you may get the same rate but not likely anything any lower and certainly not much lower a lower interest rate at all.

Let’s say you have a $300,000 loan and and interest rate on a fixed 30 year loan of 6% and you have the opportunity to refinance to 5% how much less would your payment be?

At 6% a $300,000 -30 year fixed mortgage would have a P&I of $1789.70

At 5% a $300,000 -30 year fixed mortgage would have a P&I of $1603.78

At 4.5% that same loan would have a P&I of $1514.38

The drop of 1% would save $185.92 per month or $2,231.04 per year

The drop of 1.5% (from 6% to 4.5%) would save $275.32 per month or $3,303.84 per year

Ask how closing costs can be balanced with either SRP or YSP. Lenders are not required to disclose their SRP even though they make more than mortgage brokers. Mortgage brokers, at least for the next 12 months, are require by law to disclose their YSP. Brokers do not make more than lenders. Lenders make more than brokers -ask how the spread can be used to reduce closing costs (this will result in a slightly higher interest rate but lower closing costs).