Mortgage lender gave me an Xmas Gift

[rjsob58]

I guess you could call this a brag, but I had to tell someone. I refinanced my mortgage at the beginning of 2019 with 3rd Federal. I did a 5/1 ARM as I'm planning to sell/move in about 3 years.

I got an email from them this past week that I had their "flexible" ARM which allows me to relock my rate at any time and if I relock now, my rate would go from 4.49% to 3.29%. It will cost me one time fee of $295, but it lowers my monthly payment by about $220/month. I called them looking for the "gotcha", but there is none. I reviewed the paperwork and can't find any rational reason not to take advantage of this.

Are they really that nice/good or am I missing something?

 

[Maenad]

I doubt a bank will ever do something nice for you that doesn't also benefit them - it's a business, not a charity.

I could see a few things:
1. They think interest rates are going to drop, so locking you in to this rate will be a net benefit, or
2. They want to sell off a bunch of their mortgages to someone else who doesn't want ARMs, so they'd rather give you a lower fixed rate now and get your mortgage off their books, or
3. They're getting some competition from other lenders now that rates are lower again, and would rather keep you at 3.29% than lose you entirely.

Neither one of these is "cheating" you, necessarily, and getting your rate down 1.2% is a net benefit for you, so as long as you read the paperwork carefully, go for it!

 

[athena53]

It can happen- I got a letter from Wells Fargo years ago when interest rates went down- I could refinance to a lower fixed rate at no cost. They were as good as their word (and yes, I know WF has been in the news for signing up their customers for products they didn't need/want over the last few years).

All we could figure was that they didn't want us to refinance with a competitor.

 

[jazz4cash]

Third Federal is a very unusual S&L so I am not too surprised. I took out a heloc with them last year and have been generally satisfied. Many of their rates are indexed to prime with a negative margin. They have some CD rates that are not terrible and their stock pays a huge dividend but it has a controversial corporate structure. Congratulations!

Here is the description from their web site for the product you have....it sure looks TGTBT

Rate Relock - Our Rate Relock gives you control to relock your rate for five more years anytime, during the entire life of your loan. You can relock your rate for another five years to the current five year rate as often as you like, anytime you like for just $295 - $595 (depending on the state where the property is located), saving you thousands of dollars compared to the cost of refinancing. And no mortgage application or home appraisal is required. Rate Relock even allows you to relock your rate every five years so that you're never without a five-year fixed rate commitment. With Rate Relock, you'll never have to refinance again!

 

[bobandsherry]

Chances are your bank is only servicing your mortgage, having sold off a portfolio of mortgages to an investor. So they really don't care what your rate is, they'd rather keep you around so they continue to collect the servicing fee.

Also, you have paid for this benefit, it was factored into your original rate, paying a slight premium in the rate. Worked out for you. I see no reason not to do this.

 

[brewer12345]

Sounds like a no brainier to me

 

[Stormy Kromer]

WF did the same for me about 10 years ago. I got a similar call and asked "what's the catch" they sent me the offer in writing and I went down over 1% point on a fixed 15 year mortgage. No closing costs at all on my end, just a lower rate for the remainder of the term.


My only thinking is that they wanted to make me an offer before I went looking somewhere else to refinance.

 

[dixonge]

3. They're getting some competition from other lenders now that rates are lower again, and would rather keep you at 3.29% than lose you entirely.

That sounds about right. The long-term loss from the lower interest collections is better than zero dollars if you switched, plus is offset by the cash fee.

 

[HFWR]

Quicken Loans, er, uh, Rocket Mortgage, calls me regularly with “great deals”, though none are as low as the rate I’m at now. Seems their marketing department doesn’t consult with the loan department, or they’d know that...

Of course, they also want me “cash out”, but I ain’t doing it...

 

[jazz4cash]

Quicken Loans, er, uh, Rocket Mortgage, calls me regularly with “great deals”, though none are as low as the rate I’m at now. Seems their marketing department doesn’t consult with the loan department, or they’d know that...

Of course, they also want me “cash out”, but I ain’t doing it...

Yeah I am a current customer and I get those calls too. The last time I actually followed up on one, they advised (surprisingly) to just pay extra on the mortgage I already have with them. I think they were disappointed that I was not interested in borrowing more money!

 

[athena53]

Quicken Loans, er, uh, Rocket Mortgage, calls me regularly with “great deals”, though none are as low as the rate I’m at now. Seems their marketing department doesn’t consult with the loan department, or they’d know that...

Of course, they also want me “cash out”, but I ain’t doing it...

I get a lot of mailings with "great deals" and the monthly payment is always less than my current one, sometimes substantially, even though the interest rate is a bit higher. Think it might be because I'm 4.5 years into a 15-year mortgage and the new offers restart the clock and some are for a 30-year mortgage?

 

[rjsob58]

Quicken Loans, er, uh, Rocket Mortgage, calls me regularly with “great deals”, though none are as low as the rate I’m at now. Seems their marketing department doesn’t consult with the loan department, or they’d know that...

Of course, they also want me “cash out”, but I ain’t doing it...

I talked to Quicken about a refi. Their rates weren't that great and their closing costs were the highest of the lenders I shopped. The guy started pushing monthly payment vs interest rate & closing costs/their fees which made me feel like I was buying a used car.

 

[jazz4cash]

I talked to Quicken about a refi. Their rates weren't that great and their closing costs were the highest of the lenders I shopped. The guy started pushing monthly payment vs interest rate & closing costs/their fees which made me feel like I was buying a used car.

Yep. They were more competitive and customer friendly when we got a loan from them back in 2012. They reach out from time to time now but I usually get that high pressure vibe lately. That’s why I was pleased and a bit surprised on my last communication with them when they advised to just pay extra on my current loan. Actually they had replied to an inquiry I made with Lending Tree so it was like their objective was to keep me from taking out a refi with another lender. I keep getting these teaser rates from Lending Tree but the actual rates are much higher. Lending Tree has also gone to crap IMHO.