What Happens If Mortgage Rates Decrease & I Have A Fixed Rate Loan?

By Jim Micheals

What happens if mortgage rates decrease and I have a fixed rate loan? How soon can I refinance if mortgage rates drop? Am I stuck with my mortgage rate?

If you have a fixed rate mortgage and the interest rates drop below what you are paying you can, and should, apply for a new mortgage. Refinancing a mortgage at a lower rate will decrease your monthly payment and will reduce the overall amount you will have to pay during the course of your loan. Mortgages can be refinanced at almost any time during the life of the loan. If you wish to receive a better rate make sure that you have your credit in good standings prior to trying to refinance.

How soon can I refinance if mortgage rates drop?

Most mortgages do not have a time limit on them and can be refinanced at any time. There are a few exceptions to the rule. Some high risk mortgages will have a two year clause attached to them. This means if you refinance during the first two years of the loan you will pay that mortgage company a penalty fee. This fee can be very high. Many times the fee adds up to the amount of interest the company would have made from you for the remaining period of the two years.

Am I stuck with my current mortgage rate?

You are never stuck with a mortgage rate. You can refinance at any time when you have a mortgage unless a no refinance clause is attached to the mortgage. You should refinance when the interest rate is smaller than your current rate because this will greatly reduce your overall debt. When you go to refinance make sure that you have your credit score as high as you can get it and make sure that you research the mortgage companies prior to applying for a refinance. Multiple requests for a refinance will affect your credit score.

What Happens If Mortgage Rates Decrease & I Have A Fixed Rate Loan?

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