Your current interest rate is 6.25% and you have heard that rates might get as low as 4.5%. Does it make sense to refinance now or should you wait until interest rates drop again? The truth is, there is no “golden rule” that applies to everyone but in this market there are some general rules of the road.

Know the NEW Rules: It used to be that if you could fog a mirror, you could get a loan. The rules have changed quit a bit and the loan you may have used to finance the purchase of your home may no longer be available. If you used a low or no money down loan to purchase your home this can impact the rate that you are eligible for based on the programs that are now available. Working with someone who can help you understand the new rules and how they impact you is now more important than ever.

Know your target interest rate: A target rate helps you determine when it is the right time to refinance. Your target rate is a benchmark rate that establishes your minimum monthly payment savings necessary to make up the cost of a refinance within 16 months. Usually it starts to make sense considering a refinance when market interest rates are 1-1.25% lower than your current rate. Once you determine your target rate your mortgage professional will make sure you don’t miss it when rates drop.

Know the value of your home: Some areas of the Front Range have seen their home values decline. You need to get an idea of what the accurate value of your home is to see if you are eligible to refinance. Many people try to use websites like Zillow to research the value of their home. Those people make assumptions about the value of their home based on the information that they find and don’t find out until later when they are in the process of a refinance that their information was wrong. Work with a good, local real estate or mortgage professional in order to help you determine the value of your home because they are going to be the most familiar with local real estate trends in your area or subdivision.

Bill Rodriguez is a Certified Mortgage Planning Specialist with Cherry Creek Mortgage and part of the HomeWISE Team. The focus of the HomeWISE Team is to help their clients build and maintain their Wealth through Real Estate and to provide Investment Strategies and Education for the Mortgage industry. Contact Bill today at 303-877-6323 or go to www.DenverHomeWise.com