The drop in the interest rate was not that large, only 0.25%. Still, when you’re talking a mortgage, and you’re talking thirty years, or even fifteen if you got into a shorter term mortgage, that can add up to some serious savings.
2million, of course, took the deal.
I thought about why a bank would potentially do that, as you’d think they would be reluctant to offer a deal that only means less income for them. While that’s true, I think I figured out why they would.
They’re trying to avoid additional refinances.
In 2million’s case, they dropped him from 4.625% to 4.375%. Yes, they’ll get less money, but my guess is that Wells Fargo knows that 2million is now less likely to look into a re-finance that, while he would have to pay closing costs, would get him closer to the 4% range. Wells Fargo knows that if they can keep enough people above the prevailing rate, they’ll end up with more revenue in the long term than if they took the chance of letting them re-finance.
2million got one part wrong when he said: “If Wells Fargo is offering this type of program that means most lenders are as well.”
So far, I haven’t heard of any other bank doing this and I know for a fact that my lender (Citi Mortgage) hasn’t done any such thing.
Ah, but I can only hope, right?
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I believe it is very smart. Being able to build savings through refinancing is awesome. The rate is still pretty good too. Is that a fix rate or an adjustable rate?
Thanks for sharing some good news. When Washington Mutual was still an entity they often would provide the customers with offers that would better their situation. Sterling Savings Bank has also been exceptionally good to work with.
Thanks for sharing the article. You may be right in thinking that Wells Fargo is really looking at it long-term and they really want to keep their customers now.
I just signed up for the Yakezie Challenge and have been visiting each of the members.
Man, Wells Fargo only offered us 4.75 with their no-fee. We'll have to wait to refinance again… (We blogged about it on August 25th.)
We've actually done it twice with them. First refi dropped us from 6.5 to 5.5. Second one dropped from 5.5 to 4.75. Very easy process. Definitely a benefit to working with Wells Fargo!