With mortgage rates improving, many homeowners are starting to see refinance offers pop up in their inboxes and mailboxes. It’s no surprise that when rates dip, loan servicers jump at the chance to churn their existing database. Their goal? To generate more business. The problem? Those offers don’t always have your best interest at heart.
Just recently, a client of mine shared a refinance proposal they received directly from their loan servicer. On the surface, it looked appealing: a lower monthly payment and an interest rate that seemed like a win. But when I looked closer, I saw that the servicer was recommending a 7/1 ARM (adjustable-rate mortgage).
Does refinancing from a 30-year fixed into a 7/1 ARM make sense? In most cases, absolutely not, especially if you plan to stay in your home for the long haul. An ARM might lower your payment temporarily, but after the fixed period ends, your rate (and monthly payment) could climb significantly. That’s not the kind of surprise any homeowner wants if this is your forever home.
Here’s the key difference: while servicers often focus on selling “convenience” and a lower immediate payment, they aren’t looking at your whole financial picture. They’re trying to create transactions, not necessarily protect your long-term financial wellbeing.
That’s where we come in. Our approach is simple: if a loan doesn’t make sense for you, we won’t recommend it.
In the case above, we helped our client refinance into a 30-year fixed loan instead. While the rate was about a quarter percent higher than the ARM offered by the loan servicer, the stability and security of knowing the payment will never adjust outweighed the temporary savings. Plus, we still saved our clients money compared to their old loan.
A refinance should always be tailored to your goals, your plans, and your future, not just what looks attractive on paper today. Before you sign any refinance offer, make sure you’re looking at the whole picture.
If you’ve recently received a refinance solicitation, don’t go it alone.
Give us a call first. We’ll walk you through the options, crunch the numbers, and make sure any loan you choose truly supports your long-term goals.
Because at the end of the day, it’s not just about saving money, it’s about making the smartest financial decision for you and your family.
