Best time to refinance mortgage

Some of you may even want to pay down some extra principal to quality for a refinance once mortgage rates go down further. As I was getting harassed at the car dealership the other day, something dawned on me.

There are optimal times throughout the month and year to refinance a mortgage due to human nature. Timing makes a difference when you want to save money. Dropping by the car dealership every other week is one of my favorite hobbies. I get to go for test drives, soak up that wonderful new car smell, and curiously practice my negotiation skills all for free!

Try it some time. I've refinanced my primary mortgage five times. And, have refinanced my other rental properties by a combined 10 times in the past 10 years.

With each refinance, I get better at negotiating. I learn where I can press for credits and when I can no longer squeeze blood from stone.

I've also learned there is a best time of the month to refinance a mortgage. And a best time of the year as well. I got him to own up to our agreement, but we never did business again. I've gotten to know five mortgage loan officers across various traditional banks such as Citibank, Bank Of America, and Chase.

They've all shared with me some of their motivational points, which are all the same. One also shared with me why it's so hard to get a mortgage nowadays. With my experience in refinancing, working in finance, car dealing, and personal relationships with people in the mortgage business, let me share with you some discoveries I've found to get the best mortgage rates possible.

What banks recommend: If it's up to the loan officer, the best time to refinance a mortgage is always! This is because they are paid through transaction volume. The more mortgages they refinance or originate, the greater they get paid.

In this current interest rate environment, you could do well to look at rates. If you have not refinanced or checked rates in the last months, I'm pretty sure you'll be pleasantly surprised. You may be able to get a similar mortgage at least 0.

I know I did. What I recommend: I only recommend homeowners refinance their mortgage if they can lock down a similar mortgage at least If you can do this, refinancing now is a no-brainer. Here are some additional refinance tips to reference to help you with the process.

When you want to determine the best time of the month to refinance a mortgage, or year, always figure out your break even point. If you can break even within 36 months, that's OK provided you KNOW you plan on staying in the house for another five years.

A break even point longer than 36 months is just not worth the time or effort because nobody knows the future for sure. The median homeownership duration is only 5. In a shaky economic recovery, investors tend to pile into US Treasuries.

So, in other words, investors would rather invest in a risk-free asset that barely keeps up with inflation instead of buying Apple stock. In a bull market, investors tend to sell treasuries gov't bonds and buy stocks or other instruments because they feel the risk reward ratio is better. Even if The Federal Reserve is raising rates, that doesn't necessarily mean mortgage rates are going up.

The market determines rates, not the fed. But, now it's time to strategize when to refinance to get an even lower rate at the margin. It's all about understanding a person's motivation and understanding the spread. Related: Should I Do A Cash-IN Refinance?

The Benefits And Risks Of Paying Down A Mortgage For A Lower Rate. Each mortgage loan officer has either a monthly or quarterly target to reach.

Practically every single sales department has monthly and quarterly quotas. This is especially true for publicly listed companies given they have to report results every quarter. If you've ever been to a car dealership, you can sense they are much hungrier the last week of the month vs.

the first week of the month! Very few people can keep up their selling intensity every single day without burning out. Thus, most people save their energy for the last two weeks of the month and the last month of each quarter.

You can see from plenty of organizational behavior charts how effort really drops off after a particular deadline. Everybody knows what it's like to relax after studying so hard for a mid-term or final!

Conclusion: The best time of the month to refinance your mortgage is the last two weeks of the month. Year-end bonuses make up a large portion of one's total annual income in the financial services industry.

There are plenty of cases where a year end bonus can be 2X-3X your base salary if you are a star performer. As a result, driving revenue for the firm matters when bonus decisions are being made. Nobody, and I mean nobody, remembers much of what you did the first quarter of the year.

That's why when it comes time to pay your year-end bonus you need to remind your boss of your accomplishments. There is asymmetric emphasis on what you did in the second half of the year. And more importantly what you did in the 4th quarter! Another important thing to know is when each firm's fiscal year as opposed to calendar year ends.

It would be nice if all companies' fiscal years were the same as their calendar years. That is starting on Jan 1 and ending on Dec 31, but this is not the case. Some companies have fiscal years that end on June 30th! In other words, their fiscal year for accounting purposes, which includes paying bonuses starts on July 1 and ends on June Thankfully, most banks have fiscal years ending on Dec Assuming books close on Dec 31, bonuses for the fiscal year must be determined at least two weeks before i.

Dec 15 or sooner. Hence, mortgage loan officers know to be the most aggressive in closing loans in the 4th quarter of the year.

The idea is to finish the year strong. Make amends for a bad first half, get paid a handsome bonus sometime in January. Then, cruise for the first half of the new year and repeat! Conclusion: The best time of the year to refinance your mortgage is in the 4th quarter: October, November, December.

The best time to refinance during the 4th quarter are the last two weeks of October and November, and the first two weeks of December. Banks work on spreads.

If they can pay 1. Look at current savings and CD interest rates of 0. They are abysmally low. Mortgage loan officers have wiggle room as to how much spread they want to make off your loan. For their best customers, such as those who provide consistent referrals, banks will often charge a tiny spread or no spread just to retain the relationship.

Such clients might have multiple different product accounts open which are more lucrative for the bank. Relationship pricing for mortgages is a big thing. For new customers who don't have a lot of assets, the spreads are wider. When mortgage loan officers are aggressively trying to hit their quotas, they will give you more wiggle room.

They do this by narrowing their spread or providing more credits. Not only is generating revenue important, loan officers like to show a large number of loan originations or refinances. There is a customer lifetime value for every customer as chances are there will be future refinances and healthy referrals.

If the spread narrows, there may be some downward pressure on mortgage rates. On the other hand, the Fed is unlikely to become an MBS buyer again and slower prepayment rates and longer duration are here to stay.

It's important to understand how systems work. Now you understand how mortgage loan officers are incentivized. As a result, you can use this knowledge to get yourself the incrementally best rate possible.

Now that you know the best time to refinance a mortgage, you should also know how to get the best mortgage rate possible. Check the latest mortgage rates online. You'll get real quotes from pre-vetted, qualified lenders in under three minutes. Are you looking to lower your rate or payment?

Do you want to pay off your loan faster? A mortgage refinance could allow you to do both. By answering a few simple questions you can determine if a mortgage refinance makes sense for you. Or use the table below to crunch the numbers. If you do opt to refinance, consider doing it toward the end of the month.

This will reduce your closing costs since you will only need to pre-pay interest for a couple of days. You might also consider refinancing toward the end of a quarter, when mortgage lenders may be looking to meet quota and potentially offer better deals to do so.

While refinancing your mortgage sounds good in theory, you need to make sure you're a good candidate for one. In this case, timing and the current state of your personal finances are key.

If you're not sure what rate you'd qualify for, use an online tool to find out now. Thanks for reading CBS NEWS. Please enter email address to continue. Please enter valid email address to continue.

Will home prices fall this spring? Here's what some experts think.

The average homeowner in the United States sells or refinances within the first 10 years of purchase. That's why lenders use the yield on a year Treasury More specifically, it's often a good idea to refinance if you can lower your interest rate by one-half to three-quarters of a percentage point Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. However, many lenders say 1% savings is

Best time to refinance mortgage - There are several factors you should consider when deciding whether refinancing is right for you The average homeowner in the United States sells or refinances within the first 10 years of purchase. That's why lenders use the yield on a year Treasury More specifically, it's often a good idea to refinance if you can lower your interest rate by one-half to three-quarters of a percentage point Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. However, many lenders say 1% savings is

Using a mortgage calculator is a good resource to budget some of the costs. Reducing your interest rate not only helps you save money, but it also increases the rate at which you build equity in your home, and it can decrease the size of your monthly payment.

For example, a year fixed-rate mortgage with an interest rate of 5. That same loan at 4. Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take.

One such step is to file a report to the Consumer Financial Protection Bureau or with the U. Department of Housing and Urban Development HUD.

When interest rates fall, homeowners sometimes have the opportunity to refinance an existing loan for another loan that, without much change in the monthly payment, has a significantly shorter term. However, if you're already at 5.

So do the math and see what works. While ARMs often start out offering lower rates than fixed-rate mortgages, periodic adjustments can result in rate increases that are higher than the rate available through a fixed-rate mortgage.

When this occurs, converting to fixed-rate mortgage results in a lower interest rate and eliminates concern over future interest rate hikes.

Conversely, converting from a fixed-rate loan to an ARM—which often has a lower monthly payment than a fixed-term mortgage—can be a sound financial strategy if interest rates are falling, especially for homeowners who do not play to stay in their homes for more than a few years.

These homeowners can reduce their loan's interest rate and monthly payment, but they will not have to worry about how higher rates go 30 years in the future. If rates continue to fall, the periodic rate adjustments on an ARM result in decreasing rates and smaller monthly mortgage payments eliminating the need to refinance every time rates drop.

When mortgage interest rates rise, on the other hand, this would be an unwise strategy. While the previously mentioned reasons to refinance are all financially sound, mortgage refinancing can be a slippery slope to never-ending debt. Homeowners often access the equity in their homes to cover major expenses, such as the costs of home remodeling or a child's college education.

These homeowners may justify the refinancing by the fact that remodeling adds value to the home or that the interest rate on the mortgage loan is less than the rate on money borrowed from another source. Another justification is that the interest on mortgages is tax-deductible.

Many homeowners refinance to consolidate their debt. At face value, replacing high-interest debt with a low-interest mortgage is a good idea. Unfortunately, refinancing does not bring automatic financial prudence. Take this step only if you are convinced you can resist the temptation to spend once the refinancing relieves you from debt.

Be aware that a large percentage of people who once generated high-interest debt on credit cards , cars, and other purchases will simply do it again after the mortgage refinancing gives them the available credit to do so.

Refinancing your mortgage isn't free. You can always refinance with your current mortgage lender or shop around. Rocket Mortgage is among CNBC Select's top picks for refinancing. It provides 8 to 29 year fixed-rate terms and requires only a credit score for conventional refinancing, though it does not have HELOCs or USDA loans available.

You can get pre-qualified in minutes online and cash in on the full value of your house. Rocket has an app that makes your mortgage easy to manage as well. SoFi is another good option for refinancing your mortgage, with 10 to 30 fixed-rate terms, and a credit score requirement.

SoFi does not offer USDA, VA or FHA loans, however. Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox.

Sign up here. As rates begin to fall, demand for mortgage refinancing is increasing. If you're interested in refinancing, it's important to think about why you plan to refinance as well as the potential benefits and pitfalls to doing so.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products.

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Mortgage Refinance Explained - When Should You REFINANCE? Seasonality plays an reginance role in determining when mortgagw refinance. Best time to refinance mortgage Navigation. Ashley Kilroy Ashley Besr is Same day funding experienced financial writer. Keep in mind, though, that you'll also pay closing costs on this new loan. Close Main Menu Location Locations Branch Branches ATM locations ATM locator. Mortgage Products. Loan approval is subject to credit approval and program guidelines. When Is the Best Time to Refinance Your Mortgage?

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