Last week the rates dropped to yet another low.  If analysts are correct, we should see mortgage rates below 6% for the next few weeks and possibly a few months.

These same analysts emphasize the rate will also rise.  Typically when this happens homeowners march out and refinance their mortgages, to claim a better rate.

Is a lower rate a reason to refinance?

Maybe, but maybe not. Before refinancing a borrower should consider the overall cost analysis.  Refinancing a loan means closing costs.  If they aren't paid up front they will need to be rolled into the new loan.   That raises the loan balance.  Is this really a good thing?

Many homeowners who purchased in the past 12-24 months may have 1st and 2nd mortgages combinations with blended rates well over the mid-to-high 5% rates available now.  Refinancing these WILL result in a more costs and the borrower still  needs to have at least 5% equity in the home.

If a borrower is currently in an "interest only" first loan, a refinance into a fully-amortized loan, even at a rate 1% lower, will see a payment increase.

Bottom line, think, evaluate and  understand what you are doing before refinancing.  After all the final responsibility is up to you. Don't screw it up!

Be smart like a fox, do what's best for you and your family.

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About the photo: I captured this shot today while walking in the park.  This fellow came directly at me, I think he was wanting a Thanksgiving snack!  I didn't have one for him, so he went off the other way.