Whatever happened to the conventional wisdom of waiting for the rates to drop 2 percent before refinancing?
You have a 30-year fixed rate loan. A loan officer calls you up and says you can refinance to a rate 0.5% lower than your current rate, and there will be no points, no appraisal fee, no title or escrow fees, etc. A No Cost loan, with a lower rate, lower payment and your loan balance stays the same. Is this a deal too good to pass up? How can a bank and broker do this? Doesn’t someone have to pay? Who? This is not a scam. Thousands of homeowners have refinanced using a zero-point/zero-fee loan. Some refinanced multiple times in a single year. Some homeowners used zero-point/zero-fee adjustable loans to refinance and get a new teaser rate every year. This works due to rebate pricing, also known as yield-spread pricing or service-release premium pricing. You pay a higher rate in exchange for cash up front, which is then used to pay the closing costs. You are financing the closing costs by paying a higher rate. A zero point loan, with the borrower paying the closing costs would be 0.25 to
Related Questions
- Whatever happened to the conventional wisdom of waiting for the rates to drop 2% before refinancing ?
- Whatever happened to the conventional wisdom of waiting for the rates to drop 2 percent before refinancing?
- Whatever happened to the conventional wisdom of waiting for the rates to drop 2% before refinancing?
