BiggerPockets Money Podcast - Is Refinancing Worth It with Today’s Falling Rates? (+ How Much It’ll Cost)

Starting point is 00:00:00 Today we're talking about one of the most common questions homeowners have. When is the right time to refinance your mortgage as interest rates drop? And will refinancing impact my fire journey? Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen and Scott Trench is not joining me today, but he's here in spirit. Bigger Pockets has a goal of creating one million millionaires. You are in the right place if you want to get your financial house in order because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting.

Starting point is 00:00:33 Today, I'm bringing on Greg Roller, my go-to lender, to help guide you on when you should be refinancing and what to keep in mind. Before we get into this show, we want to give a big thank you to our show sponsor. This segment is sponsored by Bam Capital, your path to generational wealth with premier real estate investment opportunities. See why over 1,000 investors have invested with Bam Capital at biggerpockets.com slash bam. That's biggerpockets.com slash BAM. Now let's get into the show. Greg, thank you so much for joining me today.

Starting point is 00:01:08 Thank you for having me. Greg, today we are going to discuss what to consider before you refinance your mortgage, the costs you can expect when you refinance, and what the impact of refinancing actually is, especially in 2024. Right now, mortgage refinance demand is 94% higher than a, it was a year ago. And on the surface, that's like, oh, my goodness, holy cow. But when you think about it, a year ago, rates were really, really high. Nobody was refinancing because. Yeah, no, there wasn't any refinances a year ago. So you got to, you guys, the bar is really low. Yeah. 94% of nothing is not that

Starting point is 00:01:45 much. Exactly. If interest rates drop as we keep hearing from the Fed, should you actually refinance? Will this help you achieve financial independence? Or could it actually slow, you? you down. So Greg, can you start by explaining what refinancing a mortgage means and how it works? Sure, absolutely. So you're refinancing the property, whether that's your primary residence or an investment property. So you're replacing the current loan that you have with a brand new loan. Or if that property is free and clear and you have something else that you want, you need money for, you're refinancing that property with putting new financing in place. And how does it work? Do I just call you up and say, Greg, I want to refinance it?

Starting point is 00:02:27 and then you do everything? Not everything. We do most of the stuff for you. So not quite everything. So it's exactly like a purchase loan, except you don't have the, you know, you don't have the agents involved. You don't have the seller involved. So you talk to your loan officer, you know, figure out if refinancing is the right move for

Starting point is 00:02:44 you right now. If it is, then you get an application in. We start collecting documents just like on a purchase. You know, we're going to have you get this pay stubs and taxes and bank statements and things like that. We may or may not need an appraisal. depending on your situation. And then we just go forward with the loan process as normal.

Starting point is 00:03:02 You know, at the beginning of the refinance cycle, it's about 30 days. But as rates get lower and more people jump in, it can push out. You know, when rates were in the threes, it was taking 90 to 120 days to close a refinance, just because everybody was so busy. So it's, you know, timing, you know, it's not set in stone like a purchase where you have a, this is when your closing date is at the beginning of the contract. You just said you figure out if refinance. is the right move for you right now. What factors am I looking at to help me determine if refinancing

Starting point is 00:03:34 is the right move? So anytime someone asked me about refinancing, the very first question I asked them is, what are you trying to accomplish? You know, nine times out of ten, it's I'd like to lower my payment, but some people want to shorten the term of their loan. Some people, as we've heard, have run up a lot of credit card debt in the last couple of years. So maybe it's consolidating debt. Maybe you're getting divorced or buying a partner out of a property that you own. So you have to refinance to get them off the loan. So the right time to refinance is when the refinance meets the goals that you're trying to accomplish. You know, you're not going to shorten your term and save money and be able to consolidate debt. But those probably aren't all your goals. So we've got to figure out

Starting point is 00:04:16 what you're trying to do and then see if a refinance is the satisfies the goals that you're trying to meet. Yeah, it sounds like those are individual goals. Most of that there's not like a blanket. Oh, everybody should refinance when rates hit X. Right. Right. So, Greg, when interest rates drop, we often hear that that's a great time to refinance. And, you know, rates have been as high as, what, 7, 8 percent. Yeah, we were 8 and a quarter. Eight and a quarter. So with rates coming down, it seems like it would be a good idea to refinance. But what impact do lower rates have on refinancing? So it obviously lowers your payment, right? If you can lower your interest rate. but you have to look at cost benefit, right?

Starting point is 00:04:59 So what's it cost to me? What's the benefit? So assuming someone's at 7%, right? And they can, you know, here in three weeks or a month, whenever it takes, we're back at 6%. Right? So you're dropping it a whole. You often hear that it's the right time to refinance where you can save 1% on your loan, but that's not true for everybody.

Starting point is 00:05:20 The cost, so our costs to refinance, you know, if you need an appraisal, on title and all that on a primary residence run about $3,200, you know, give or take a few dollars. The costs don't go down as the loan amount goes down. So the costs are about the same on a $400,000 loan as it is on $100,000 loan. So if you have $100,000 loan at 7%, your principal and interest is $665.30 a month. If you have a $400,000 loan at 7%, your principal in interest is $26,000. 61 a month. If you refinance that both of those loans is 6%. A $100,000 loan goes down principal in interest of $599. So you're saving $66 a month. But on the $400,000 alone, if it goes down 1%, you're saving $263 a month. So if you're taking what you're saving by what it cost you,

Starting point is 00:06:15 the $3,200 a month, the $100,000 loan, you're going to take 48 months to break even on your cost. right? So I, yeah, I don't know if it would be worth it or not. Probably wait until it's like a point and a half. But on the $400,000 loan, you're saving $263 a month. So you're breaking even in 12 months on that loan. That's probably, and that's generally where people pull the triggers when they can break even in 10 to 12 months on the cost that they're spending. Will refinancing set you back further if you want to be completely debt-free on your path to financial independence? Depends. Are you going to stay in that house for 30 years? You know, that's because most people don't.

Starting point is 00:06:55 You know, because I know people are like, well, I don't want to reset the clock on my 30-year loan. I've been in here two and a half years, you know, and probably the answer is who cares? You're probably going to move in three or four years anyway. People move every five to seven years historically. But if it's your forever house or if you're keeping it as an investment property, you don't have to reset the term back to 30 years. You know, if you're two and a half years into your 30-year fixed, you can set the

Starting point is 00:07:22 the term to 27 and a half months, or excuse me, 27 and a half years, you can pick any term that you want there. It will affect what you're saving monthly a little bit because there is a little bit of savings when you reamortize it back out to 30 years. But if you've only been there a couple years, it's really not going to change much. Stay tuned for more after a quick break. And if you're looking to potentially refinance your mortgage, just like we're talking about today, you're going to need a great lender. To find when in your area, go to BiggerPockets.com, slash, Lenders. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing.

Starting point is 00:08:02 And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth and future planning together in one dashboard on your phone or your laptop.

Starting point is 00:08:26 Feel aware and in control of your finances this tax season and get 50% off your Monarch's subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves the needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code Pock at Monarch.com for half off your first year.

Starting point is 00:08:50 That's 50% off at Monarch.com. code pockets. I love Matt, said no one ever. Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes. But somehow, every small business owner ends up doing it. Your dreams of creating, selling, and growing

Starting point is 00:09:05 get replaced by late nights chasing receipts, juggling invoices, and wondering if that bad sushi lunch with Scott counts as a write-off. Change all that with Found. Found is a business banking platform built to take the pain out of managing money. It automatically tracks expenses, organizes invoices, and even preps you for tax season

Starting point is 00:09:20 without you doing the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed. It saves time, money, and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, Found makes everything easier. Expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com. That's F-O-U-N-D dot com.

Starting point is 00:09:45 Found is a financial technology company, not a bank. Banking services are provided by lead bank, member FDIC. Don't put this one off. Join thousands of small business. owners who have streamlined their finances with Foun. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still

Starting point is 00:10:07 regularly re-listen to the highest impact titles. Lately, I've been listening to Bigger Leen or Stronger for Fitness, the Anxious Generation for Parenting Perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful is its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more, all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years.

Starting point is 00:10:38 Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP Money. Welcome back. Let's jump right in with Greg Roller. What market factor should homeowners be considering before they decide to refinance? Is it just the interest rate or are there other considerations? Mostly the interest rate, but that kind of goes back to what you're hoping to accomplish. You know, I would say if you're trying to prove your overall monthly expenses, right, and you've got a couple of credit cards out there, $20,000 or $30,000, you know, you're paying 28, 29% interest that some of them are charging on those.

Starting point is 00:11:19 you know, even if you're not benefiting that much by refinancing, you know, on the interest rate, but you're consolidating that debt and making your monthly expenses much better than I would look at that. There's also, are you paying mortgage insurance, right? Because say that same person who has had the $400,000 loan is saving the $263 a month on their principal and interest, but they're also paying mortgage insurance right now. Knock another $160, $170 a month off that when you're, if you're at the point you can drop your mortgage insurance, then you're saving $425 a month. So it's definitely situational for every borrower, what other things you need to look at to decide

Starting point is 00:12:01 whether it's a right move for it or not. When you're refinancing, do you have to qualify for a refinance the same that you do for a regular mortgage, like a first mortgage? Yeah, absolutely. So income, assets, credit, the whole nine yards. Okay. So I can see a situation where somebody got a. mortgage at a higher interest rate, then quit their job because they've become financially

Starting point is 00:12:24 independent, and now the refinance isn't available to them. So I think that's another consideration before you start to refinance. Depending on their financial independence, right? So you can look at, so say you're 59 and a half, and you've got, and you're retired, right? You've put enough money away where you're retired. And you're not currently drawing on those self-directed. retirement accounts. You can do things to qualify. So if you've got a million dollars in, you know, retirement, 401k IRA, whatever, and your 59 and a half, you can set up a draw from those self-directed accounts. As long as we can show that you have enough assets where you continue to draw at that pace for at least 36 months, you can use that as income for qualifying.

Starting point is 00:13:16 Oh. And then you can turn the draw off. You know, you don't have. if it continue to draw because it's self-directed. Oh, interesting. And that's only for people that are 59 and a half, or is that for any age retiree? You have to be 59 and a half for self-directed retirement accounts. There's some exceptions, like if you had an inherited IRA or something like that, then you don't have to be 59.5 for regular assets, if you just have cash in the bank, right, there's asset dissipation calculations, but those are much, much harder to qualify for than the self-directed retirement accounts. I believe on our on our seven-year jumbo arm, we do a 120-month asset dissipation calculation. So we take whatever you have, divide by 120 months, and that's what we can use for

Starting point is 00:13:57 income. I believe the Fannie, I believe Fannie's 360 months. And I think, don't quote me on this, but I think Freddie might be 240 months to use assets. So you need a lot more assets to qualify if you're doing it that way. Okay. Well, this is something to consider if you are on the path to financial independence and you have a higher rate loan, maybe now is the best time for you to refinance your loan, especially if you're considering retirement soon. I would definitely, before you give your notice to your employer, I would suggest that you look into refinancing your loan. Oh, absolutely. Okay, so let's talk about the costs associated with refinancing. You said that there about $3,200 for a refinance. And that's the appraisal and that's the, just the bank.

Starting point is 00:14:48 Title work, underwriting, credit reports, stuff like that. And there'll be some variation between financial institutions on those costs. We don't charge an origination fee. So some places just mandatorily charged an origination fee, which can be a quarter point to 1%. I probably would look for somebody who doesn't charge an origination fee. I wouldn't pay points to buy down the interest rate because I don't know, hopefully your listeners are familiar with, you can pay additional fees to buy down the interest rate, especially since we're at the beginning of the interest rate cycling down because odds are if you're refinancing now, you might be refinancing 10 or 12 months from now. So, but yeah, it's about $3,200 when you're looking at appraisal, title, credit report.

Starting point is 00:15:37 filing fees, all the fun stuff that goes into making a mortgage. Lots of times, especially now since we're at the beginning of the refinance cycle, you can, instead of paying points, you can actually get points to offset your closing cost. So say you're at seven and a half on your current mortgage rate, and today's refinance rate is six and a half, right? At par, you're not paying any points to buy down the interest rate. you're not getting any credits to offset the closing cost. You might be able to go say, well, if I take 6.75,

Starting point is 00:16:14 my lender could give me a half a point credit towards covering those closing costs. So on a $400,000 loan, one point's equal to 1% of the loan amount. So a half point would be $2,000 towards offsetting that $3,200. So now your cost are like $1,200. So then you're not putting out. as much money. So if we keep continuing to move through the cycle and rates continue to move down into 2025 and 2026, then it's not your break-even time shorter. So your costs for doing it's less, you're saving money quicker. And then if rates present themselves again, where it's

Starting point is 00:16:52 fortuitous to refinance, you can jump in and do it again at that point. Okay, so let's say I want to do all of that. What do I say to my lender if I'm not using you because not everybody listening will be able to use you. What do I say to my lender so I can get that higher rate and the credit so that I reduce my out-of-pocket costs? So I would ask them to see a rate stack. So when I run rates for your scenario, right, with your credit score and your loan amount and your purchase price and your type of property, it gives me a spread of rates, right? So most days there's a zero-zero-zero rate where you're not paying any points and you're not getting any credits. And then you can buy down the interest rate. And they'll say, okay, for a quarter point, you can buy it down this much. For a half point,

Starting point is 00:17:41 you can buy it down this much. And then there's the opposite. It says you can bump it up an eighth of a point and get this much of a credit. And you can bump it up, you know, a quarter point and get a half point credit. So I would ask them to see that. And they could even send you a cost illustration that shows the lender credit towards offsetting your costs, cost that way. Oh, I love that. I'm glad I asked that because those are words I would not have used. Perfect. What about multiple properties at once? So a lot of our listeners are real estate investors. If they bought a property in the last couple of years, they might have a higher rate than what's current. Can you refinance multiple mortgages at the same time? Can. It's easier if you do them all with the same lender at the same time.

Starting point is 00:18:26 So I think my record was three or four at the same time because the ones that are closing first, you have to use the principal and interest payment on the ones that haven't closed yet for qualifying, right? Because that doesn't exist yet. They haven't closed that one yet. And if your lender's really good and creative and you're tight on your ratios, you can say, okay, if I close this one first and then that one second, and then that one that makes the whole thing work better because as those payments come down, your income to debt ratios on the remaining loans you need to do will also come down accordingly. Oh, okay. So you want a knowledgeable refinancing lender to look at all of your things. And here's where your lender is your partner in this transaction. You need to give them all the information. So if you want to refinance four mortgages, tell them about it and let them help you.

Starting point is 00:19:25 Ask them questions. I mean, Lenders, I don't want to throw lenders. Like, I'm not talking smack about lenders, but lenders aren't nearly as busy now as they were, you know, three years ago. So they have some time to have conversations with you and they want your business. If you're going to refinance four loans with them, they're going to look through the numbers and be like, oh, yeah, do number two first and then do number four second and then number one and then number three or, you know, whatever it works out too.

Starting point is 00:19:51 Even if they're busy, if your lender doesn't have time to talk to you about all the stuff that you need to know for your transaction, whether it's one property or four properties, then you're talking to the wrong lender. Yes, yes, yes. If you're in Colorado, call Greg. All right. Is there ever a situation where refinancing might not be the best option, even if rates are lower? Yes, absolutely.

Starting point is 00:20:14 You know, I've talked to, and the ones that come to mind have been elderly borrowers. You know, when I'm talking to them and they've heard that rates are coming down and that's, you know, a good thing and you know I look at it I'm like okay well it's it's saving you 180 $200 a month but you know they're like well I'm probably not going to be in the house you know more than two years and if I look at it and it's like well you don't break even for 20 months you know what are you're not really saving anything you're going through this effort you know you're going through this expense um you know you'd obviously be be generating a commission for me but that's not what it's all about you know it's about the borrower at the end.

Starting point is 00:20:56 So if you're not going to be there, then what's the point? Or somebody whose job's planning on, they move a lot with their job. You know, if you're not, if you're not planning on, because you have the break-even point, right? This is where I break even and this is where I start saving money. Okay, well, if I break even in 20 months, but odds are my job's going to move me in two years. It doesn't really make any sense. I mean, you can do it if you want to, but I would probably tell somebody it doesn't make a whole lot of sense to do it. Okay, that makes that, I appreciate the honesty in your answer. Can you explain the

Starting point is 00:21:30 difference between a rate and term refinance and a cash out refinance? Yeah, so rate and term refinance, you can refinance the loan balance. You can refinance the closing cost. If you're escrowing, you can include the prepaid's because when you have, even if you have an escrow account on your old loan, and it's, excuse me, it's the same lender. You can't move that. escrow account from the old loan to the new loan. I can't do that. The only thing we can do with the old escrow account is give that money back to you. So if you're going to continue escrowing, we have to collect enough taxes and insurance to start the new escrow account. So you can do loan amount, closing costs, prepays for escrows if you're escrowing, and you can receive up to $2,000 cash in hand at closing, and that's a rate and term refinance. Other than that, if you're getting $2,001 out, right, whether you're paying off debt or consolidated, a second or unless it's a purchase money second, that's considered a cash out refinance. If you have a first and a second used to buy the house, which hasn't been that common in the last few years, but there's probably still a few of them out there. If you're taking a purchase money

Starting point is 00:22:39 second and an original first and putting those together, that's a rate in term refinance as well. And then the other one is if you're buying out someone, divorce or partner, you know, like you went in with somebody on an investment property and that person wants. out for whatever reason. If you're buying out that person, as long as it meets the same criteria, you know, you've got to buy out, closing costs prepays, and no more than $2,000 cash in hand, then it's considered a rate and term refinance. Okay. And you said earlier, you can choose the length of time that you want your loan to be. So just because you're two years into a 30 year, doesn't mean you have to refinance and reset the clock to 30 years, although I believe in

Starting point is 00:23:21 having mortgages for as long as possible. I might get a 40 years. year the next time I do it. No, absolutely. Yeah, no. And that's kind of what I talk to people about as well, because especially people that are thinking, oh, maybe I'll move to a 15 year or something like that, you know, even when rates were at eight, my 401k was earning 14 and a half percent. Why would I pay anything off that's costing me eight if I can earn 14? You know, that's just kind of always, and that's not everybody's philosophy, but that's always been my philosophy with it as well. But no, absolutely you don't have the the rate won't change it'll still be a 30 year rate it'll say 30 year fixed but you can set the term you know the amortization term for you know 27 and a half years or 26 years

Starting point is 00:24:04 or what do you want it to be i love that i didn't know that we have to take one final break but more from gregg on the impact of refinancing after this tax season is one of the only times all year when most people actually look at their full financial picture including income spending savings investments the whole thing and if you're like most folks it can be a little i've opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial

Starting point is 00:24:38 life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in the needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code pockets at Monarch.com for half off your first year.

Starting point is 00:25:08 That's 50% off at monarch.com code pockets. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed's sponsored jobs helps you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking.

Starting point is 00:25:33 And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored posts. The best part? No monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer.

Starting point is 00:25:50 speed up your hiring right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash bigger pockets. Just go to Indeed.com slash bigger pockets right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash bigger pockets. Terms and conditions apply. Hiring, Indeed is all you need.

Starting point is 00:26:13 When you want more, start your business with Northwest Registered Agent and get access to thousands of free guides, tools, and legal forms to help you launch and protect your business all in one place. Build your complete business identity with Northwest Today. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They're the largest registered agent and LLC service in the U.S. With over 1,500 corporate guides who are real people who know your local laws

Starting point is 00:26:38 and can help you and your business every step of the way. Northwest makes life easy for business owners. They don't just help you form your business. They give you the free tools you need after you form it, like operating agreements, meeting minutes, and thousands of how-to guides that explain the complicated ins and outs of running a business. And with Northwest, privacy is automatic. They never sell your data.

Starting point is 00:26:56 And all services are handled in-house because privacy by default is their pledge to all customers. Visit Northwest Registeredagent.com slash money-free and start building something amazing. Get more with Northwest Registered Agent at Northwest Registered Agent.com slash money-free. Marvel Television's Wonder Man, an eight-episode series, now streaming on Disney Plus. A superhero remake. Not exactly what we'd expect from an Oscar winning director.

Starting point is 00:27:23 Action! Simon Williams. Audition for Wonder Man. I'm going to need you to sign this. Assuming you don't have superpowers. I'll never work again if anyone found out. My lips are sealed. Marvel Television's Wonder Man.

Starting point is 00:27:40 All eight episodes now streaming. Only on Disney Plus. Getting ready for a game means being ready for anything. Like packing a spare stick. like to be prepared. That's why I remember, 988, Canada's suicide crisis helpline. It's good to know, just in case. Anyone can call or text for free confidential support from a train responder anytime. 988 suicide crisis helpline is funded by the government in Canada. Welcome back to the show. What should homeowners expect? They've listened to this episode and

Starting point is 00:28:15 they're like, you know what, now is the right time for me to refinance. What should they expect when they're working with a lender during the refinancing process? And are there any tips for making it go smoothly? Just be as organized as you can. And everybody operates differently. You know, when somebody does an application with me, I either take the application or the application comes in line and I review it. And then I have two assistants that work full time for me. And one of my assistants will send them out a needs list. It says, okay, based on the application that you put in, we're going to need this and this and this and this. And we have a secure portal

Starting point is 00:28:52 that you can upload them to. You know, we may or may not need an appraisal. Appraisal waivers, they don't come from the lenders. They come from Fannie Mae and Freddie Mac. So if it's a Fannie Mae, Freddie Mac, regular loan,

Starting point is 00:29:04 and we run it through their automated underwriting system and they come back and say, yes, you need an appraisal, or no, you don't need an appraisal. So, you know, if you don't need an appraisal right now, if you apply for a refinance a day, I can get you closed in two with two.

Starting point is 00:29:20 two and a half weeks. But a lot of it's dependent upon you. Because I think we're going to be moving into a refinance boom here in the next few months. At the beginning of it, the delays are mostly on the borrower side. Once it really gets rolling, I don't think we'll see it like it was in 2020, 2021. It's just, you know, rates were three. No one had three. But as lenders get busy, appraisers will get busy,

Starting point is 00:29:47 title companies will get busy. And then that timeline on that refinement. will move further and further out. It's just you can only do so many, you know, in a month. And when it's busy, you know, purchases are always king, you know, because purchases, you've got a closing date. This is the closing date. You've got to meet it for the agents. You've got to meet it for the seller. You've got to meet it for the buyer. So when it was busy, we'd make sure all our purchases for the month were good to go. And then we would cram as many refinances into the month as we possibly could to get people closed and get them, get them down the road. But yeah, a lot of

Starting point is 00:30:20 it's on the borrower, you know, because the lender's ready. We're just waiting for your stuff. We can't do anything until you get us the stuff we need. Ooh, that's a really good point. So I have applied for a lot of mortgages in my life, and there's always something else that the lender needs. They will give me a list of like 10 things, and I get all 10 things. I send them over, and they're like, oh, yeah, by the way, we just need one more thing. And if you don't get that one more thing back to the lender, they're not going to just sit there and wait for you to get that one more thing to them, they're going to move on to the next thing. Absolutely. Especially when it gets busy. Yeah. And finish that as far as they can. If that

Starting point is 00:30:57 personally gave them 10 things and they need the 11th thing, they can send it back and then come grab your 11th thing. But yeah, when your lender asks you for things, they're not asking you for things just for fun. They don't really want to see your W-2s. They have to see your W-2s. So get them both years that they're asking for. Get them all the extra stuff that they're asking for as quickly as possible because you don't want to get stuck behind a regular loan. Right, because it's, it's kind of like triage. We'll take the ones we can get done and then circle back around to the ones next week when we have our pipeline meeting. Oh, have we still not gotten this thing from Bob? You know, we're still waiting for this and for this person. Come on, Bob. Yeah, if it's busy,

Starting point is 00:31:35 if it's busy, we don't have time to chase you down for stuff. Oh, my goodness. Yeah. No, it's on me. And then if I'm the one who wants to refinance, I'm the one who's going to save money. I should be the one getting my stuff to you. Yeah, every day you delay, if that's your $400,000 loan, every month you don't close, you're losing $240. And that's only if I don't have PMI. If I have PMI, now I'm losing $400 a month. So is it worth it to find that one document? Greg, do you have any other advice for our listeners who are considering a refinance? I tell all my clients, whether it's purchases or refinances. I'm like, don't, because you can almost see some people coming to my office, they sit down, and they're talking to me about rate and I'll be in say this today and I'm like okay we're at 6.375

Starting point is 00:32:21 well and I'll be like well the guy they're like the guy down the road told us you know it's a 6 and an 8th I'm like well are you paying points to look to to buy down that rate are you paying an origination fee what's your total cost you know what's your break even is don't get so fixated on rate that you don't pay any attention to anything else you know and I'll print out that rate stack I was talking to you and I'll show them the math. I'm like, here's what it's costing you. Here's your principal in interest. Here's your break even. And if the other lender gives them a loan estimate, I'll say, here's my costs, here's their cost at this, and do the same cost benefit over time analysis.

Starting point is 00:32:59 Because just because it's a lower rate doesn't mean you're getting a better deal. But you see people get so fixed at it on that number. You know, it's a lower rate. It needs to be better. And there's a lot of shady lenders out there and they depend on that. They'll throw out any rate out there and they'll sell you the costs. They're like, oh, they're good sales guys. I'm not a good sales guy. I'm a good math guy. I'm like, here's the math. At the end of the day, if I explain the math to you and you want to pay two or three points to buy down the rate because it makes you happy, I don't care. I don't get paid any more or any less either way. But as long as they understand the math and why they're doing something,

Starting point is 00:33:34 then I did my job correctly. I love that answer. Thank you, Greg. Any other questions that you want me to set you up with so that you can give yet another amazing answer. So back when rates were in the threes, right? All these online lending companies and fly-by-night lending companies came out of the woodwork. So when rates went up, these guys started to starve to death. So what they started doing was they started paying the credit reporting agencies to sell them what are called triggered lead list. So when I hit the button and pull your credit, if you haven't done the opt-out pre-screen, you're on the triggered leads list that goes out to all these lenders. And I had my clients tell me they were getting 70, 75 phone calls a day from these guys,

Starting point is 00:34:18 you know, trying to get them, hey, you do the application with us, you know, and just bombarding them with text and phone calls and stuff like that. So opt-out prescreen is put on by the credit reporting agencies where you can go on there and opt out electronically for five to seven years, for five years from these triggered leads list. it's the best way to protect yourself from, from all these harassing phone calls. So even if they're not going to refinance or even if they're going to refinance, you know, with some other lender,

Starting point is 00:34:50 everybody in the world should know about opt-out prescreen. And how do you check that box or do the opt-out? So it's a website. It's opt-out prescreen.com. And you click the home button, I think, and it says opt-in, opt-out. You clicked opt-out for five years electronically. and then you fill in your information, you know, name, social security number,

Starting point is 00:35:12 date of birth, address, phone number, all that good stuff. And it's the credit reporting agency, so it's okay to put this information in there. But then that gets you off the triggers leads list, but it does take a couple days for that to work through the system to get you to make sure you're off the,

Starting point is 00:35:27 so when I have people call me on a Friday night to do a loan application because they found the perfect house and they didn't listen to me earlier in the week and do the loan application and opt out, I can do it for them, then, but it's not nearly as effective, right? They're still getting 30, 40 phone calls a day for a while. So do this now. If you're waiting for rates to come down, do this now and then save

Starting point is 00:35:49 yourself the pain and heartache, you know, later on. I love that. Opt-out prescreen.com. Go there, put this show on pause and go over there and fill it all out so you're not getting these 70-80 phone calls. I have clients that were telling me the same thing. Oh, my goodness, I just put in an application, and now I've got 50 phone calls. Yeah, yeah, it's crazy. It is, and we're not exaggerating. It is 50 times your phone is ringing. You just want to throw it against the wall, or maybe that's just me.

Starting point is 00:36:19 All right, Greg, this was so awesome. It's always lovely talking to you. This is even better to get all of this information and share it with my fantastic listeners for my listeners who are in Colorado, because you're only licensed in Colorado, right? Correct. Yeah. For my listeners in Colorado, where can they find you? I'm through the Elevations Credit Union website, or they can just dial my cell phone.

Starting point is 00:36:40 That's my only phone. Don't call my office line. My cell phone's 303, 807, 477777. So you can text me or call me, but that's how to find me. Yes. And what I love most about Greg, why he is my go-to lender, is because he doesn't lie to me or my clients. If you're not going to qualify, he's not going to tell you you are, and then come back later and be like, oh, yeah, sorry, you did it.

Starting point is 00:37:02 He won't say he can close in 15 days if he can't, and he has never missed a deadline for me ever. So that's my little spiel for Greg. Yes. But also, he's just a great source of information. I can call him about anything. I just wish every one of my clients would use you, Greg. Unfortunately, I can't direct all of them to you because some of them are like, no, I've got a lender. I'm like, oh, that's always code for I'm not using Greg and it's going to be a disaster.

Starting point is 00:37:28 That's okay. That's okay. The ones that use you, I have a great experience with. I appreciate that. All right, Greg. Well, thank you so much for your time today. This was so informative. And anybody listening who still has questions about refinances, go back to the beginning and listen

Starting point is 00:37:44 to it again because maybe you missed something. I feel like this was just very all-encompassing. So thank you, thank you. Thank you so much for joining me today. Well, thank you for having me on. I'm glad we finally did this. I'm happy to come on any time you'd like me to. Awesome.

Starting point is 00:37:57 Okay. Well, then I'll have you on next week. Okay. Bye, Greg. Bye-bye. All right. That was Greg Roller, and that was a ton of information we just threw at you. Now you can see why he's my go-to lender. Refinancing your mortgage can save you a lot of money every month, but it's not the right fit for everyone. Run your numbers, compare how long you're going to be living in that house, with how long it's going to take to break even on the refinance before you start

Starting point is 00:38:27 the process. I love Greg's tip about buying up the rate. to reduce your out-of-pocket costs. But again, run those numbers to make sure you are aware of what it will cost you. And huge thanks to Greg for that opt-out pre-screen tip. I went and did it between the recording of the show and recording this outro, and it truly took me 45 seconds to do. All they ask is for your name, your address, your social security number, and your phone number. And then you hit enter and they say, thanks.

Starting point is 00:38:57 You'll never get another email again. And that is what I love. All right. So go do that now if you are thinking about a refinance or a mortgage loan. That wraps up this episode of the Bigger Pockets Money podcast. I am Mindy Jensen. Scott Trench is here in spirit. He's like hovering over my shoulder.

Starting point is 00:39:16 He'll be back next week. And I am saying take care, Teddy Bear.

BiggerPockets Money Podcast - Is Refinancing Worth It with Today’s Falling Rates? (+ How Much It’ll Cost)

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.