Why would a bank offer refinancing at a lower interest? Is any money saved at all, or is it just paid on a different timeline?
In: 265
I work in the mortgage space (not in origination). Banks make money off mortgages in a few ways,
1) closing cost from the loan
2) keeping the loan on their balance sheet for interest income
2b) selling the loans to Fannie Mae , Freddie Mac or others
3) income from servicing the loan. As long as the loan have an outstanding balance, they make money every month
3b)sell the servicing right to someone else
(1) They will make money from closing cost.
(2)If they sold your loan, they don’t care if you refi your loan
If they didn’t, they wouldn’t want you to refi
(3) if they kept the serving right, they want to give you a new rate before someone else do. That way they can service you longer.
If they sold the serving right as a Mortgage Serving Right (MSR), they don’t care if you refi.
Latest Answers