That’s a good question. In the past 3 years rates have been between the high 6% to mid-7% range, so there is definitely an opportunity to make your home less expensive. But when? How do I maximize my savings? If I am going to pay for another closing (yes you are going to pay, whether it is rolled into the loan or subsidized into the rate) I want the biggest bang for my buck.
We should be entering a rate cutting cycle. We have indication from the Federal Reserve that they are shifting focus from inflation to labor market weakness (read all about that in my last 2 blogs). Next Friday the 5th of September we get the August jobs report. If it’s in line or worse, “Start your Engines”. If it’s better or even Much Better as we saw in January with the December report. Jobs added came in at almost double what was expected. Stock Markets plunged and the Bond Market Surged. It took us almost 3 months to recover.
The market has already priced in a cut. The results of that report will show us where we go.
Every loan is different; every borrower is different. It comes down to what you can save and how long it will take you to recover. Here is an example. If you reduce your payment by $200 a month and your closing costs are $4,000 that means it will take 20 months to see the savings. If you plan on only being in the house for 2 years, it’s still a good investment. If you took $4,000 and put it in a CD at 4.25% at the end of 2 years you would have $4,347. If you spent the $4,000 to close to save and put the 200 a month in savings at the end of 2 years with 4 months of saving 200 you would have $4,800.
It is a good idea to speak with a Mortgage professional to analyze your options. Paying the closing out of pocket vs. rolling them into the loan. Understanding your closing expenses. Funding a new escrow account. Buying down the Rate to maximize your payments. Value of an appraisal to reduce or remove Private Mortgage Insurance
That’s why working with a human being and not on online portal will maximize your savings based on your situation. It is never the lowest rate!
If you are in Massachusetts, Rhode Island Connecticut, or Florida, I can personally assist you. If you are in any other states I can connect you with a mortgage professional in our company who can assist you with understanding the options in front of you.
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