Is waiting for rates to come down a valid reason to hold off?

Hi, this is Jason Skelton with Pacific National Lending.

Welcome to another Q&A session where I answer mortgage questions from you all on the internet.

Today's question is:

"Is waiting for rates to come down a valid reason to hold off?"

Summary:

Jason separates the question into purchases and refinances, because the answer differs. On a purchase, he does not think waiting makes sense: if you believe rates will fall, buy now and refinance later when they do. On a refinance, the analysis depends on whether there is enough benefit available today. If the numbers work and the transaction can be structured as a no-cost refinance, he sees no reason to wait, because the borrower can refinance again later without having paid anything the first time. If there is no real benefit, waiting is reasonable. His general position is that when a measurable benefit exists and the transaction carries no cost, acting now is the better recommendation.

Answer:

It depends on the situation and the scenario. On a purchase, I don't think it makes sense. If you think rates are going to go down, buy now and refinance when they do come down. If you're talking about a refinance and you think rates are going to come down, then it depends on whether we can benefit you enough right now. If we can, and it doesn't cost anything, we can do it as a no-cost refi. There's no reason not to do it now. That way, if rates do come down later, we can do it again and you didn't pay anything for it the first time. But if there's no benefit, then it doesn't make sense. So yes, sometimes it makes sense to wait for the rates to come down a little bit. But generally speaking, most of the time, if there's a benefit to doing it now and we can do it with no cost, then that's what I recommend.