Lately, there’s been a lot of talk about buying now and refinancing later, once mortgage rates drop.
Of course, that’s if mortgage rates do indeed fall at some point in the near-future.
There’s no guarantee they will, but if inflation does settle down, we could see a return to more reasonable interest rates before long.
And that would support the marry the house, date the rate supporters, who believe it’s better to buy now while rates are high.
After all, if rates drop again, competition to buy a home could heat up fast.
Enter the Navy Federal No-Refi Rate Drop
While there’s logic to buying now and refinancing later, it still involves a pesky mortgage refinance.
And even if rates are lower, there are downsides to refinancing. For one, it’s time-consuming and paperwork-intensive.
There are also closing costs involved, stress, and of course you need to qualify for the thing. That’s never a guarantee if your situation changes. Or if home prices fall, etc.
To alleviate some of this concern, select lenders have been offering to waive fees on subsequent refinances if you use them for a home purchase loan.
But this still requires the borrower to go through the entire home loan process a second time. Not fun.
That’s where Navy Federal Credit Union’s “No-Refi Rate Drop” comes in. They’ve taken both the big cost and hassle out of it.
As the name implies, you can refinance your high-interest rate mortgage into a lower-rate mortgage without refinancing.
That way you can take advantage of lower mortgage rates without all the hoops and hurdles, and the closing costs.
And it seems super easy, with apparently only one document to sign.
How It Works
After six consecutive monthly payments, you can take advantage of their No-Refi Rate Drop if they fall by at least 0.25% versus your existing rate.
For example, if your current interest rate is 7%, and rates fall to 6.75%, you could take advantage.
Aside from needing to make six payments, you also must be current on your loan with no more than one 30-day late payment within six months of the rate drop request.
Additionally, your loan must be a Homebuyers Choice, Military Choice, or 15- or 30-year jumbo fixed-rate loan.
Note that cash-out refinances are not eligible for the no-refi rate-drop option, nor are adjustable-rate mortgages.
Assuming you fit that criteria, and rates drops enough, all you have to do is call them to start the process. If eligible, they’ll send you a single document to sign within five business days.
Simply return that signed form and a $250 payment and your new lower rate will take effect within 30-60 days.
They say you’re guaranteed to get the mortgage rate that is offered on the day you call in, similar to a traditional mortgage rate lock.
So it doesn’t matter if rates increase while they process your application.
What’s more, you’re able to lower your rate multiple times during the loan term as long as you are eligible and pay the $250 fee each time.
Another perk is your loan term will stay the same. So if you make the request two years into a 30-year loan term, you’ll still have 28 years remaining.
It won’t increase the loan term like a standard refinance could.
Is the No-Refi Rate Drop a Good Deal?
As always with promotions like these, you have to use the company now for the promise of future, potential savings.
In other words, you won’t get to take advantage of No-Refi Rate Drop if you don’t use Navy Federal initially.
That means you need to compare loan rates and fees with Navy Federal versus other options.
If you plan to use them regardless, it’s an added perk that may or may not come to fruition.
If you’re deciding between them and other lenders, you need to consider if this potential benefit tips in their favor.
Of course, mortgage rates may not fall in the future, there’s no guarantee that they will.
But if they do, the mere $250 fee to lower your rate 0.25% or more sounds like a pretty good value.
Not just from a monetary standpoint, but the time savings as well.