My brother purchased a house in 2014 and had a rate of 4.5%, then 2 years later he refinanced and was able to get a rate of 2.5%. Why would a bank choose to reduce the amount of money they would get on his mortgage?
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There are several benefits for a bank when homeowners refinance their mortgage. The most common benefit is that the bank can charge fees for processing the loan, which can add to the bank’s profits. In addition, if the new mortgage has a lower interest rate than the old one, the bank may be able to earn more interest income on the loan.
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