Mortgage Q &A: Refinance Now or Wait for Lower Mortgage Rates

Q:Mortgage rates are going up. My wife wants to refinance so we can renovate our kitchen and deck, but I'm thinking we should wait and see if rates go down again. Any ideas?

A: Chasing mortgage rates is risky; there is a lot more downside than upside when they're already this low. Mortgage rates are influenced by a wide range of factors including domestic and global economic conditions. While economists can make predictions, no one knows precisely how markets and mortgage rates respond to every aspect of developing news.

One thing to keep in mind is that current mortgage rates remain near historical lows and still represent a good deal. For a cash-out refinance, request mortgage quotes from our network of lenders and see what's available to you. Don't refinance your home unless you can get a better loan than you already have, and that you'll save enough to recoup the refinancing costs fairly quickly (you can work this out with our Refinance Breakeven Calculator).

If your main reason for refinancing is to renovate your home, remember that you have the option of keeping your current mortgage and simply taking out a home equity loan or line of credit for the renovation. Cash-out refinancing costs more than rate and term refinancing, while home equity loans can carry very low fees (although the rates are higher). Look into both options and see which has the lower cost overall.

We recommend that you obtain quotes from several competing mortgage lenders before choosing a loan. Compare estimates of lender fees and discount points as these costs can vary. Keep in mind that mortgage lenders need information about you (credit score, home value, property type) to provide an accurate quote -- otherwise it's just a rough estimate. When reviewing mortgage quotes, make notes and a list of questions. Mortgage loan officers are happy to answer questions and can help you choose your best home loan.

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