Time to Re-finance

Time to Lock in Latest Rate Drop

If you've got a knack for finding deals, you already know the basic principle: know when (and where) the sales are.

That means buying a car in August, just before the new models come out.

It means getting gas at Costco when prices rise, because they only change their prices once a day (true).

And it means refinancing around and just after the holidays, when the home lending business is slowest and rates are the most attractive.

This year, forget the part about "slowest." However, due to the extraordinary, ongoing actions taken by the Federal Reserve and Treasury to stimulate lending, rates the last 3 weeks have fallen off a cliff: from over 6% just before Thanksgiving, to well below 5% now.

The drop is so dramatic that it behooves you to consider re-financing, even if you just closed on your home six weeks ago! In fact, I've got a few clients who are precisely in that situation.

On the one hand, it's admittedly annoying to think that you just missed even better rates. On the other hand, if you're staying long-term, the drop in rates is just too good to pass up.

Taking the sting out somewhat: some of the biggest fees involved with re-financing, like the appraisal, may not be necessary, because so little time has elapsed. If you go back to the same lender who just handled your closing, my guess is that they will do their best to waive or minimize whatever fees they can (or at least they should!).

So go ahead and make the call. When you do, be sure to ask your lender if they offer a re-lock option, which lets you re-set the rate, one time, if there's a further drop in rates before your loan closes.

With interest rates so volatile at the moment, the benefit may easily outweigh the nominal cost.