FLU,
I know you get it, I think.
You’re exactly right that the real numbers don’t lie AND there are different ways to benefit from a refi.
When you are going to a lower rate at no cost, there is no break even point you benefit from day one compared to your previous rate.
If you want to compare what the additional savings would be at .125% or .25% lower if you did pay to get the loan, I suppose you could create a spreadsheet and get confused but I can explain it simply in about 5 seconds.
If you want to pay for a loan and get a lower rate,
the payback period to break even is usually 5 to 7 years.
Each .125% has a different spread and not everybody qualifies at the same rate.
Sadly,
another problem is that most ‘loan people’ don’t understand the details nor can they explain the
true net benefits and options in refinancing.
Pathetic but true.
Most loan people only grasp 2 things:
a)How much they are going to make on your loan
b)How much your payment will be
They are incapable of discussing anything beyond these 2 points. They can’t grind through it with you.
There is nothing in the education & testing requirements that a licensed, regulated loan officer needs to be capable of explaining different options and the various net benefits. As a result, there’s a lot of misinformation out there.
