Why “Now” Is Always The Best Time To Refi; Jumbo Returns :)
GREAT NEWS – JUMBO HAS RETURNED!
As expected and hoped for, one of our best jumbo investors returned to the market today with far lower rates.
We are now very close to where we were prior to the COVID-19 crisis.
WHY “NOW” IS A GOOD TIME TO REFI – IT IS NOT JUST B/C WE WANT MORE BUSINESS 😊
Borrowers ask me every week if “now” is a good to refinance, and I always say “yes” if their refi saves them even a few bucks and is “no cost.”
And no, this is not a self-serving message to get clients to come to JVM to refi.
I am encouraging everyone to refi, no matter which lender they use, for the following reasons:
- Most refinances are “no cost.” This means lenders cover all of the nonrecurring closing costs or one-time fees, so borrowers have nothing to lose if they refi now and then refi again in 6 months – if rates fall further.
- Lower payments. B/c rates are so low now, many borrowers can reduce their payments substantially. Hence, there is no reason to wait to refi later, even if borrowers think rates will fall further, b/c those borrowers are just giving up savings for no reason.
- Refis are much easier. Refis are not only much easier than purchases for a variety of reasons, they are much easier now than they used to be b/c of better technology (simpler application processes, electronic asset verifications, etc.) and loosening guidelines (such as appraisal waivers, “W2-only” income documentation, etc.)
- Borrowers can simply refi again at no cost if rates fall further. B/c most refis are no cost and b/c refis are so much easier, borrowers can simply refinance again IF rates fall further – so there is no reason to give up any potential savings now. We only ask that every borrower keep their loan for six months so that we, as a lender, do not get hit with a massive “early pay off penalty,” but we can lock borrowers into a new lower rate as soon as 4 months after a refi closes and then close at the six-month mark. And yes, we very closely monitor ALL of our borrowers’ rates to watch for every refi opportunity.
- Black Swans. In yesterday’s blog, I explained how excessively low interest rates make future “black swans” (totally unexpected/unforeseen market disruptions) much more likely. And b/c of this, there is no way to know where interest rates will be. Hence, fence-sitting borrowers waiting for rates to fall further could be in for a rude awakening, as unforeseen events could easily push rates upward as well. I repeat this often, but in today’s world of central-bank-dominated economies, nobody knows … anything.
So, I am going to repeat another mantra of mine: Get in while the gettin’ is good.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167