Price Adjustment or refi tax?
As we close in on December many of us are already dealing with the fifty basis point cost being added to refinances. Call it whatever you like, this cost is real and it does show up. Many clients don’t understand why refinances are more costly than the same purchase loan, but they are. Each of us must be sure to explain this change and be sure to share that it is an industry wide cost and not within the control of individual companies or lenders.
This leads me to the point I want to make, that you always need to bring up that purchase loans do not have this additional cost applied to them so it might make more sense to just sell their current home and buy a new one instead of refinancing. In some cases, it is a sound strategy, especially if they were contemplating a move in the not too distant future. Buying their “Forever Home” before that house becomes more expensive or if rates start to move higher might be the best option! It always pays to run the numbers.
Big day in the bond market yesterday and with the jobs report coming up Friday morning will contain important information that will impact the industry through the end of the year. It’s important to keep informed. Pay attention to your rate sheets. Pricing doesn’t always appear as fast as bond prices improve, but the possibility of improvement is there. Be sure you are following your locks and closing dates closely.
Last but not least, you have got to get your holiday calendar clear and your timelines for your closings and the last day you are willing to accept applications for both refinances and purchases that will close by the end of 2020. Not many days left to get your plan secured!
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