The other day, I wrote about current mortgage refinance rates. Guess what? In the time since I wrote that articles, rates have continue to fall. In fact, Zillow showed average rates of as low as 4.71% for 30 year fixed rate mortgages as this morning (it’s frequently updated, so your results may vary), and Bankrate is reporting an overnight average of 5.08% for 30 year mortgages. Either way, it’s clear that mortgage rates are very, very low right now.
Of course, if you’re trying to decide when to refinance, then the key question is whether or not they’ll head even lower. Since I don’t have a crystal ball for this sort of thing, I have to rely on things like Bankrate’s Rate Trend Index, which currently states that “Rates are likely to head lower” over the next 30-45 days. Just keep in mind that the RTI is far from foolproof, as it’s simply a summary of the opinions of a panel of experts.
My advice is that, if you’re thinking about refinancing, get a ballpark estimate of how much it’ll cost you to do so. With that in hand, you can estimate your “Payback Period” (i.e., how long it will take to recoup your closing costs). If the payback period is too long (or if you don’t plan on staying in your house for very long), then it doesn’t make sense to refinance no matter how enticing the rates seem to be. But if the payback period makes sense, then go for it. Just try not to look back with regret if rates dip further after you pull the trigger.