Refinancing - how long before you should?

zovall

Well-known member
If there is no prepayment penalty on your loan, how long should you wait before refinancing after a purchase/refinance? Does the loan officer on the previous loan get affected negatively?
 
Borrowers are often told by their loan officer not to refinance within x weeks or months, but that's not law.

Banks generally speaking do not claw back commissions from their loan officers if a mortgage refinances within any given period of time. When I was at a large, North Carolina based bank - one with a flag in their logo - I had some loans refinance before I was paid on the purchase!

Mortgage Bankers generally speaking do not claw back commissions from their loan officers. When the company learns of the credit report pull or the request for a payoff demand, the loan officer will be notified to try and rescue the deal from an early payoff - but more often than not the company will refinance the loan again for you with a non-commission earning staff member.

A Mortgage Broker will more than likely have an Early Pay Off Fee (EPO) pushed to them. The fees can in some cases wipe out a branches profit for a month, as well as claw back commissions paid to the loan officer.  10 or more jumbo EPO's and the funding lender might cut off the broker. 25 or more and the broker is bust-o.

Banks and Mortgage Banks all have contingencies for EPO's. The little guys with the razor thin pricing? Not so much.

If you had a mortgage broker or a very small mortgage banker produce your loan, since they got a pretty good rate for you the first go-round, it wouldn't hurt to give them a heads up and see what they can do.
 
There is no prepayment penalty passed onto the borrower but the MLO would get their commissions clawed back. And if it was a no cost loan, the MLO fronted your escrow/title/closing cost fees out of their commission so they are out $3000-$4000 if you refinance early.

I understand that if rates improved drastically in a short period of time it is beneficial to the borrower to pursue refinancing again. I would give your previous MLO a shot first so they can at least recoup some of the cost.
 
Thank you both!
SGIP, in your response, you separated it out into three areas: Banks, Mortgage Banks, Mortgage Brokers
Banks would be places like Chase, BofA, Wells Fargo, Citi, etc right?
What are examples of Mortgage Banks versus Mortgage Brokers? What are LoanDepot, Owning, Quicken Loans?
 
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