What rate difference is good for refinancing my existing loan?

Question

Hello everyone! I’ve received a lot of helpful responses on my recent posts—thank you all for your time and support! I have another question today. My husband currently has a 30-year fixed $315K mortgage that was secured around November/December 2023 at a rate of 7.99%. With mortgage rates trending downward lately, should we refinance now to secure a lower rate, or would it be better to wait until autumn for a potential further drop? I found several online opinions suggesting that high refinancing costs might negate any monthly savings for a couple of years. Given that a rate cut is anticipated later this year, do you think refinancing is the right move? For reference, his credit score is over 810.

Mason Weiss · Answer

Hey Ying, I would do a no cost refinance. Pay nothing out of pocket and drop that rate to most likely the upper 6 range. I have encouraging many of my client's who purchased in 2022/2023 to do this right now. This way, if rates drop again you could refinance again in 6 months but for now lock in the lower rate that you can obtain.

Do you want me to message you directly about this option?

Mason Weiss · Answer

Yep the lender covers the fees and you still can drop your rate which means nothing out of pocket for the investor and you save every month. Sounds well worth it to me.

Erik Estrada · Answer

How is the bank making their money? Do they service the loan? Are they requiring opening up a checking/savings account?

Typically most lenders will sell their notes after closing and they make their money from the fees, and the back end when they sell it. There are portfolio lenders however that do make their money through servicing, and checking/savings accounts.

Trying to wrap my head around this. Do you happen to have a Loan Estimate to share showing this is the case?

Zach Wain · Answer

@Ying Tang - 100% what Mason said.  A no closing cost refi is the preferred option for most scenarios.  If your closing costs are $0, if rates drop in a year then you refinance again without any worries.

Everyone is different, some people love to save $100/mo and some people do not care about saving $300/mo.

But, there are not many things in life that are deflationary.  Refinancing is one of them!  Dropping your payment is meaningful, especially if the costs are $0.  That is free money.

I think a no cost refi makes sense at 0.5% drop in rate!

Or, you can keep the payment the same and shorten the loan term a couple of years and pay your mortgage off.  Again, free money, just structured differently.

Mason Weiss · Answer

Yes you can still get all those covered right now in a refinance and bring your rate to the high 6's with $0 out of pocket. Just watched one of my client's do it today.

Joe Impagliazzo · Answer

Hi Ying find a lender like mine, CMG where we offer the ability to refinance as many times as you want every 6 months for the next 5 years and all the lender fees are waived as well as the appraisal paid for if needed

Stanley Parsley · Answer

Greetings

how about we get together

imnin San tan valley

id be more than happy to sit and look at all the options

Mason Weiss · Answer

They might service it, nothing required from the property owner though. They just save money.

Ryan Maggard · Answer

I can help. Have options below 6%

What rate difference is good for refinancing my existing loan?

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