With no clear answer to the question, brokers and other experts recommend that homeowners at least find out whether they qualify for a new loan. The housing crisis and credit crunch have left many borrowers owing more than their house is worth, or with damaged credit, putting low rates out of reach for many as lenders have tightened standards.
But for those who do qualify, the opportunities are out there, with rates as low as 4.5 percent on 30-year mortgages.
Opinions differ on whether to lock in a rate that offers immediate savings, or gamble that rates will go lower.
"A lot of people are putting in applications ahead of time and waiting for a certain rate," said Earnest Sahady, owner of Nationwide Mortgage Services, a mortgage lender and broker in Rockville. "We don't expect rates to go much lower at all. If people are out there needing to pay off debt or change their adjustable-rate mortgages to a fixed rate, this is the time to do it."
Adam, the financial planner who says many of her clients are trying to refinance now, is considering a refinance of her own mortgage as well.
"But I'm more tempted to wait a month or two," she said. "When a new administration comes in and rolls out a stimulus [program], there may be further incentives for homeowners."
All agree that borrowers need to look beyond the low rates before plunging into a new mortgage. Refinancing makes sense for some situations, but not all.
Refinancing can cost from $2,000 to $3,000 or more in closing costs, and restarts the clock on the term of a new mortgage, whether for another 30 years or 15. Homeowners with a relatively small principal balance or with few years left to pay off a loan typically won't benefit from a refinancing, brokers said.
And refinancing probably won't make sense for borrowers who already have a fixed rate of 5 percent or below.
"You have to have some sense of what you're trying to accomplish," said Keith Gumbinger, a vice president at HSH Associates. "For many borrowers, that is to save money, but for many borrowers refinancing turns out to be a money-loser because they don't stay in the house long enough to get your money back from the transaction."
For instance, if you pay $2,700 in closing costs and cut monthly payments by $150 a month, it would take 18 months to break even.
