What should you do before you refinance?
If you’re familiar with your current mortgage terms, an online mortgage refinance calculator can help you determine your new monthly payment if you were to refinance and help you to calculate your break-even point. If you don’t know some of the information, call or set up a meeting with your current lender to discuss the costs of renegotiating the terms.
Be prepared to assess your current finances, especially if they have been impacted by Covid-19. “Refinancing right now has changed drastically for anyone who has had their employment affected,” Polakovic says. “You may need to wait a while until the lender deems your income reliable and stable. If your employment and wages have not been negatively affected, then the process will feel very similar.”
And, factor in the current economic climate, he adds. “Lenders initially had a large pullback in funding due to the significant unknowns caused by the pandemic,” he says. “However, as time has passed, most have resumed lending on the conventional side.”
Even if the pandemic is ongoing, homeowners may want to consider refinancing soon, Gray says. “As long as interest rates remain low, qualified borrowers [meaning those whose income or employment has not been negatively impacted due to Covid-19] will continue to explore saving in interest costs through refinance opportunities. I do not expect rates to increase sharply anytime soon, but we should expect servicers to adjust rates in order to slow down early payoffs and maintain well-performing mortgages.”
Could we see rates lower? Gray believes it’s possible but anticipates only marginally lower numbers.