Q & A: Is Now a Good Time to Refinance?

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Is now a good time to refinance? Have interest rates gone up?

Interest rates are no longer at the absolute bottom we've seen over the last couple of years, but they aren't that far off. If you have not refinanced through this downturn in rates, you should probably consider it. Interest rates are still very low when looked at historically. The average 30 year fixed mortgage is 4.15 percent, which is down from 4.29 percent last week. So not only are rates low, but they have gotten a bit lower recently. There are a number of factors that come into play when considering a refinance: value of your home, your current credit profile, income qualifying (depending on when you took out your previous mortgage). That all said, you should inquire if you haven't as of yet, especially if your rate is over 5 percent.

My husband and I want to sell our home. We currently have a mortgage and a home equity loan. Do we need to pay back the home equity loan before we try to sell? Or can we take the money from the sale and apply it to that loan?

A home equity loan is considered a second mortgage on your home. When you sell, all existing mortgages are to be paid off at the closing.  Therefore, you do NOT necessarily need to do anything now as you can pay it off when you close. The only issue is if the amount of both mortgages exceeds the selling price. In that case, you should consider paying it down (if you can) to avoid a short sale. The only other thing you need to make sure of is that the home equity loan is "frozen" and a payoff statement is received in advance of closing. Since a home equity is a revolving line of credit, this is something that should be done (or initiated) about a week before you close.

I received a rate lock for my loan. However, now the people we are buying from need to push the closing back. Is there a way to extend the rate lock for a few more weeks, or do I have to re-apply?

This varies from lender to lender.  All lenders should have a rate extension policy, but you also should look into what the current rates are to ensure you are getting the best deal.  You have to take a look at what the lender is offering as far as an extension policy (or cost) and see if that is the best arrangement to suit your needs.  It may be too far into the process to look to move, but you need to be aware of what exists.  Scenarios may exist where you can secure an extension at no cost.


Dottie Herman is CEO of Douglas Elliman. If you have a real estate question for Dottie, please send it to: Reporters@WPCnews.com