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Interest rates keep dropping. How long to wait to refinance?

Even if you are keen to refinance your home, you may be hesitant to actually lock in an interest rate when rates continue to fluctuate and keep dropping. While it makes perfect and good sense that you would want to obtain the best possible deal, don’t let this good sense turn to bad sense by waiting forever to lock in. Some homeowners are hesitant to commit to an interest rate because they worry that if they’re locked in, a better rate will come along that they could have had if only they had waited. The fact of the matter is, locking the interest rate on a mortgage loan is, and always will be, a gamble. Sometimes you will be lucky and other times you won’t. That said, when you have a locked interest rate, you have the satisfaction of knowing that you are guaranteed this rate, regardless of whether the rates should go up at the time of your closing.

This is the goal of every refinance mortgage loan seeker; to pay a rate that is lower than current interest rates when they close the deal. Of course, since you really have no way of knowing that this will happen and can only hope this will be your outcome, instead of waiting for interest rates to continue to drop before you refinance, it is better to lock in on the interest rate that works for you.

Is it really so bad to wait and not lock in? As was previously mentioned, waiting is a gamble. You may see rates continue to drop lower and lower, but there is no guarantee they will remain this way. Thus, if you choose to wait for an even lower rate and they suddenly go up, you will have no protection and may have no choice but to pay the higher rate. The reality is that it isn’t necessary for you to squeeze every penny out of a deal to obtain the best available mortgage or to achieve great satisfaction. Once you have locked in, have confidence in your decision.

Finally, keep in mind that there is no need to panic when you are locked in. You can still go elsewhere and obtain another loan should the rates plummet by the time the deal is set to close. That said, if there ever was a situation where there was a dramatic drop in interest rates, the vast majority of lenders will renegotiate the interest rate to maintain your business.

Remember, just as it is important that you lock in on the interest rate that works for you, it’s also imperative that you carefully choose a mortgage broker and/or find a lender that you trust and who you feel is working in your best interests.

About the author: Craig Reynolds is a seasoned entrepreneur and mortgage industry veteran with over 15 years experience in managing and loan consulting. Prided in establishing successful Mortgage Consulting teams that create and foster long-term relationships with clients. Contact

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