Mortgage interest rates are  dropping and many people want to start the process to refinance into a lower rate but how do they know when it’s time? What if they start the process, then the rates drop more?

This question will come up a lot over the next year or so as the interest rates hopefully decline to more normal levels than the past 18 months or so. The easiest way to decide when it’s time to refinance, is to call Indigo Mortgage. Let us look at your balance on your current mortgage, your interest rate, and the monthly payment.

Then we will do an evaluation for you and show you what interest rate it will make sense to do a refinance. It may not be the first rate drop available this fall.

The rule of thumb is that while a refinance will save you money each month, you should be able to make up the closing costs in under 3 years.  This formula works as it prevents some lenders from offering a low rate but charging thousands of dollars in closing costs. If it takes over 3 years to make up closing costs, then either the interest rate is not low enough versus your current rate, or the lender is charging too many fees.

The second question is how do you know that you’re getting the best interest rate available. The easy answer is that you must shop that mortgage around and get competitive offers. Just because a lender offers you a good rate, that doesn’t mean it’s the best rate available for you.

When you shop your mortgage to several lenders, most often, borrowers will find that one lender is offering better terms than the other, but you will never know unless you shop for several mortgage options. And remember to include a trusted local mortgage company like Indigo Mortgage. We’ve been serving New Mexico homeowners since 2003.