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Our Free Refinance Benefit
Buy a home with a Local Mortgage loan and, if mortgage rates drop within 5 years, we will refinance your loan at no cost.
Why We Offer This Benefit
In early 2023, our company faced the challenge of how we could help both our customers and ourselves in the face of skyrocketing interest rates. As rates approached 8%, home buyers were faced with the dilemma of choosing between higher mortgage payments or delaying their dreams of homeownership.
This program started as a temporary benefit, but because of its popularity with our customers, we have made it a permanent benefit of doing business with Local Mortgage.
Our free refinance program helps our clients buy a home when they are ready, knowing they won't have to pay more to lower their rate, if rates drop after their closing.
"Their free 5 year refinance is a clear market advantage."
Allison Holden
BHHS McLemore & Co
How This Benefit Helps You
There are several ways this program helps our customers.
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Cost savings for future refinance
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Confidence to buy a home sooner without waiting on rates to drop
Cost Savings for Future Refinance
Our credit does not cover prepaid interest or escrow items related to real estate taxes or homeowners insurance.
Refinance costs vary based on loan size and location. The chart below outlines the typical closing costs for a refinance of a $300,000 loan in each of our licensed states. These are the actual hard closing costs and do not include prepaid interest, or escrows for taxes and insurance. For a breakdown of the common refinance closing costs, please visit our Refinance Learning Center.
The most obvious benefit to our customers is the cost savings on their future refinance. At the time of closing with our free refinance offer, our customers receive a closing cost credit to cover all hard costs such as lender fees, appraisal, title fees including title insurance, recording, and any applicable state mortgage tax associated with the refinance.
State
Colorado
Florida
Georgia
Mississippi
Tennessee
Refinance Closing Costs
$3,183
$5,330
$4,717
$3,887
$4,400
Buy a Home Sooner Without Waiting on Rates to Drop
Beyond the actual dollar savings with the refinance costs, our free refinance program helps home buyers purchase a home when they are ready. Waiting on rates to fall before you buy a home is tricky and timing the market with finding the right home is more luck than anything. When you are ready and can afford to buy a home, you need to buy a home.
In a typical real estate market, home prices rise when rates fall. We saw that on full display during the 2020-2021 home buying frenzy. By purchasing a home before rates drop, you may face less competition for the home you want, be able to negotiate a better price for your home, and then use our free refinance to improve your rate without incurring additional closing costs associated with refinancing. If this strategy works as outlined, you get the home appreciation when rates drop and a lower rate too.
Let's look at an example below. Buyer A buys before the rates drop. Buyer B decides to wait until rates drop before buying a home.
Buyer A purchases a $300,000 home in July of 2023, making a 3% down payment ($9,000) and finances $291,000 at 7.0% on a 30 year fixed rate mortgage. The monthly payment is $2,511 with taxes and insurance.
Buyer B continues to rent for another 15 months, paying $2,000 per month in rent from July 2023 to September 2024. When rates drop to 6.0% in September 2024, Buyer B purchases the same house across the street from Buyer A, but pays $315,000 for the home. This is a 4% appreciation rate which is less than the actual national appreciation rate of 4.5% from the fourth quarter of 2023 to fourth quarter of 2024 as reported by the Federal Housing Finance Agency (FHFA).
Buyer A takes advantage of the free refinance in September of 2024 when rates drop to 6.0%. Buyer A refinances the current balance of $287,272 and now has a new 30 year fixed mortgage payment of $2,292.
Buyer B also makes a 3% down payment ($9,450) and finances $305,550 at 6.0% on a 30 year fixed rate mortgage. The monthly payment is $2,413 with taxes and insurance.
Let's look at how these situations compare financially over this 15 month period.
Down Payment at Closing
Total Housing Payments
Equity Position
Buyer A
$9,000
$37,655
$27,728
Buyer B
$9,450
$30,000
$9,450
Conclusion
While Buyer A's housing expense was $7,655 more than Buyer B, Buyer A has $18,278 more in equity and now has a $2,292 payment vs a $2,413 payment for Buyer B going forward.
Don't buy before you are ready, but if you are financially ready and can afford it, buying sooner vs. later is the better move.
No Increase to Rates
You don't pay anything extra for this program. When you purchase a home, you get our below national average interest rates. You can always see the rates we offer on our Mortgage Rates page.
When its time to use your free refinance, you get our posted, no point rate for your credit score and loan to value scenario. Your refinance rate is not increased to cover closing costs. Customers that are eligible for the free refinance receive a closing cost credit with our no point rate offer at that time. We do offer no closing cost refinances with higher rates for clients that are not eligible for our free refinance program.
Cost Are Not Rolled Into Your Loan Amount
The closing costs for your free refinance are covered with our credit applied at closing. You do not have to increase your loan balance.
You will be responsible for any prepaid interest or escrows due at the time of closing. Those amounts due may be paid in cash at closing or added to your loan balance. Your current escrow account will be refunded to you either 1) by a credit on your current loan payoff or 2) paid back to you in cash within 30 days after closing. If your current lender does not credit your escrow refund on your payoff, they have 20 days to issue your escrow refund check
Terms and Conditions
Here are the terms and conditions of our free refinance offer.
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You must have made six (6) payments on your current loan to be eligible.
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The home must be your primary residence at the time of purchase and the free refinance.
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You must qualify for a new loan with a Conventional, FHA, or VA loan program
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Loan amount must be within the agency limit for the applicable loan program
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Refinance must be a no cash out refinance if within twelve (12) months of original note date
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New mortgage rate must be at least 0.5% lower than current note rate
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Free refinance must occur within five (5) years of the original note date
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