Whatever happened to the conventional wisdom of waiting for the rated to drop 2% before refinancing?
You have a 30-year fixed loan at 8.5%. A loan officer calls you up and says they can refinance you to the rate of 8.0% with no points and no fees whatsoever. What a dream come true! No appraisal fees, no title fees and not even junk fees! Is this a deal too good to pass up? How can a bank and broker do this? Doesn?t someone have to pay? Whose money is being used to pay these closing cost? No-this is not a scam. Thousand of homeowners have refinanced using a zero-point/zero-fee loan. Some refinanced multiple times, riding rates all the way down the curve in 1992, 1993, and, more recently, in 1996. Some homeowner used zero-point/zero-fee adjustable loans to refinance and get a new teaser rate every year. The way this works is based on rebate pricing, sometimes also known as yield-spread pricing, and sometimes know as a service-release premium. The basic idea is that you pay a higher rate in exchange for cash up front, which is then used to pay the closing cost. You will pay a higher mont
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- Whatever happened to the conventional wisdom of waiting for the rated to drop 2% before refinancing?
