Even with current rate trends, refinancing remains an attractive option for many clients. Rates remain rather low, on a historical basis, and as long as the U.S. economy and incomes continue to grow, home values should continue following suit, allowing clients a ready source of equity for refinancing. However, your clients and prospects may require your help in perceiving the value.
Making the Case
With mortgage rates in decline for so long, refinancing nwo may seem counterintuitive for those only focused on reducing their montly payment. They may not realize there are other reasons to refinance.
As a Loan Officer, this offers a timely opportunity to engage in marketing that emphasizes the recover of home values to their previous highs - and beyond in some areas - and to educate clients on how they can use this growing equity to their advantage. Many may not realize their home equity has the potential to help them achieve other financial goals.
Specifically, clients may benefit from being made aware that refinancing can benefit them by:
- Providing access to home equity through a new mortgage that allows them to take cash out to meet other financial goals.
- Potentially eliminating mortgage insurance while improving other financing terms if their home equity now exceeds 20 percent.
- Creating an opportunity to use their own improved credit history to replace an existing mortgage with more favorable terms.
- Allowing them to replace a variable-rate mortgage or HELOC with a fixed rate to protect their monthly budgets against future rate increases.
- Enabling them to affordably shorten the term of the loan from 30 years to 15 years and hasten the rate of repayment.
Touching base with clients to see if their current financing still meets their household's needs is more than good marketing. Many would appreciate knowing they have options available to them to improve the way they are managign what is likely to be their largest asset, more effectively.