Hi, it’s John from Downs Capital. And today we’re going to talk about a very common question I get from homeowners and that’s, how will I know when it’s time to refinance?

In the old days the math was much easier. Your grandparents would probably tell us, if rates were 2 percent better you should definitely refinance. And that totally made sense back then because loan amounts were so small. But in today’s world, our loans are four or five, six hundred thousand dollars. It just doesn’t take a massive move in the market to have a refinance make sense. You just want to make sure that your savings outweigh the costs.

I know when it’s time to refinance because we basically constantly monitor loan sizes, interest rates, credit scores, loan to values, all those types of things. And then we match that to where rates are and how they trade on a daily basis. And from time to time triggers pop up where it makes sense for certain people.

Now it’s easier said than done. I do this all day and I have lots and lots of systems to help me connect the dots. Can you do this yourself? Absolutely. You can read the Internet and Wall Street Journal and look for movements in the market just like we do.

 

But the tricky part is – well, let’s go to the whiteboard and I’ll show you. So this is what the interest rate market looks like. Rates going up and down and constantly moving. The question is, where does your mortgage stand to benefit from a refinance? Is it when rates are here? Maybe it’s here. Maybe it’s even up here. The reality is, the markets move so fast that when these opportunities come along they don’t last long.

Question is, will you be able to take advantage of it? Prime example. This little occurrence happened not too long ago. That three-day period of time represented a quarter percent move in the market. And because we acted fast, we were able to save seven clients a total of $18,000 a year in mortgage interest, because we acted quickly.

My rule is simple. If it saves you money and it’s free, you should do a refinance, every time. But I was kind of tricking you with this title that said how will I know when it’s time to refinance? You know, I personally think you shouldn’t have to know. I don’t recommend trying to follow all this yourself, because markets just move too fast. I recommend working with someone you can trust to help you understand all of this and jump on top of those opportunities as they come along because they don’t last long.

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