Refinancing Steps Explained: How to Prepare for Lower Rates in 2025

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Rates have gone up recently and right now refinancing is not really top of mind for most folks, but sometime very, very soon they will come back down and you don't want to miss the bus on lower rates again. So now is the time to start thinking about it. Before you jump in, however, it is crucial to understand the step-by-step process so you know what to expect and how to make the best financial decision for your home when the time comes. 

So whether you're looking to lower your monthly payments, tap into your home's equity, or even just want to know how it all works to better serve your real estate clients. Today, we're going to walk through the entire refinancing process, breaking it all down so you can feel comfortable and informed every step of the way. Let's get to it. 

Howdy, howdy, howdy to all you real estate ramblers out there. Mortgage rates are back up, home prices are up, listings are up, and it feels like all the buyers are stuck in a holding pattern kind of like a busy Saturday around DFW airport. So what do we do now? Well, it's time to load up on a little brain food, get informed, and grow your market expertise so you can wow your clients with how on top of things you are in this housing market that changes more often than my wife's favorite restaurant. 

This is the Texas Real Estate Finance Podcast market update for the week of October the 16th. And I'm your stick in the mud with a smile on his face host, Mike Mills, a North Texas mortgage banker with Geneva Financial. Think of me as your cliff notes for all the latest changes and developments that impact the real estate market in your business. 

So the Fed may have cut rates, but somehow mortgage rates have jumped to the highest level that we've seen in months. And I know right now, refinancing is not at the top of mind for most of you. But trust me, rates will eventually come back down. 

And today, I'm going to shed some light on when that might happen and when it does, how you and your clients will need to be ready. I'm going to break down the five steps to refinancing so you know exactly what to do when that plane in the holding pattern finally pulls into the gate. So buckle up, friends. 

We got a packed show ahead. And as always, I'll be squeezing in some bad jokes, random music references, and maybe even a little helpful tip or two along the way. Let's get to it.

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So as is the norm around here, we're starting things off with mortgage rates. Wondering where rates are headed? Well, despite several positive financial reports over the last few weeks, the Fed still insists on cutting rates. But does that really make sense in today's economic climate? I'll break down the latest trends, explain how the government debt and inflation are impacting mortgage rates, and discuss why rate relief might be just around the corner.

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If you've been waiting for rates to drop, you're going to want to hear this. Next up, we have signs of life in the housing market. Pending home sales were on the rise and purchased mortgage applications had increased for five consecutive weeks. 

But higher rates have spun things around a little bit. I'll dive into the latest data and talk about whether or not the market is finally starting to turn around as we move into the fourth quarter of this year, or if it's going to be a little bit of a cold winter. Then, are shrinking U.S. birth rates the next big challenge for housing? The CDC's latest data could have significant implications for the housing market.

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We'll explore how declining birth rates, older first-time homebuyers, and regional population shifts driven by policy like abortion laws might reshape the real estate landscape in the years ahead. And after that, is Texas still affordable? A recent study by GoBankingRates revealed that North Texas cities like Dallas, Arlington, and Fort Worth rank among the most expensive in the state. I'm going to break down the cost of living across Texas and show you why you need to be prepared for these shifting financial realities, whether or not you're buying or helping your clients relocate. 

And finally, for today's main event, low rates might not be the reality right now, but they're not going to stay high forever. And when rates do drop again, you and your clients need to be ready. I'll walk you through the five key steps to refinancing from assessing your financial situation to closing on the loan. 

Whether you're looking to lower your payments, tap into your home's equity, or simply want to be prepared for you and your clients, stick around to the end so you can feel confident and ready when those lower rates return. Okay, folks, before we move on, I got another quick favor to ask. As always, if you're enjoying today's episode, whether it's a nugget of wisdom, a new perspective, or even just a little chuckle, do me a solid and hit that subscribe button. 

Drop a review, or better yet, share this episode with someone in your circle that could benefit from it. The more we spread the word, the more we can help others navigate this ever-changing real estate world. And remember, whether you or your clients have questions about buying a new home or are ready to refinance at 7% or 8% rate from last year, I'm just a phone call away. 

Whether it's about getting the best mortgage, understanding refinancing, or anything in between, I'm here to help guide you every step of the way. Thank you again for tuning in. This podcast wouldn't be what it is without your support, and I truly appreciate each and every one of you. 

Okay, let's tackle the question that seems to get more and more frustrating every single day. Hey, Mike, what are the rates? Well, according to Mortgage News Daily, as of October 16th, 2024, the average 30-year fixed conventional mortgage rate is about 6.63%. The average 15-year conventional rate is about 6.07%. The average 30-year FHA rate is about 6.08%. The average 30-year VA rate is about 6.1%. And the average jumbo rate is about 6.74%. To be clear, these are average market rates provided by Mortgage News Daily and may not reflect specific rates that you qualify for. Mortgage rates can vary widely depending on factors like your credit score, loan type, and down payment, among others. 

For accurate information about your personal mortgage options, it's important to speak with a licensed mortgage professional like me or your lender. There, ass covered. Okay, so right now, all the mortgage rates are starting with a six for the most part. 

As we all know, they spiked two weeks ago following a stronger than expected jobs report and have pretty much stayed elevated since then. Last week, the CPI and PPI inflation reports came in, showing inflation not slowing quite as much as we'd all hoped. And in some cases, it's ticking back up a little bit. 

This was a major red flag, especially since inflation has been on a steady decline for most of the year. Yet, despite these economic indicators, the Federal Reserve continues to insist that they're on a rate cutting cycle. Fact, several Fed presidents, along with the minutes from their recent meetings, suggest that they still plan on cutting rates at their November meeting coming up, which happens right after the election. 

And looking further ahead, they expect to cut rates by at least one and a half percent in 2025. So, right now, all official reports we're getting on the economy show that the job market's strong, GDP is rising, and inflation might be on the rise again soon. Yet, with all of that, the Fed insists that they're going to continue cutting rates. 

And listen, I am all for lower rates, but something just doesn't quite add up. You don't cut rates when the economy is running hot with full employment, strong GDP growth, and rising inflation. You do the opposite. 

So, either the Fed is making a massive mistake, potentially fueling further inflation, or these economic reports aren't telling us the whole story. Maybe we're being slightly misled into thinking that the economy is stronger than it really is, and the Fed knows this. And maybe they're cutting rates to soften a decline that they see coming. 

But what do you think? Is the Fed making a huge mistake, or do they know something that we don't? Let me know. Now, let's talk about what we do know as of today, October the 16th. First off with jobs. 

So, the blockbuster September jobs report is still being digested by the market, but here are a few key takeaways. Number one, seasonal adjustments in this report were the highest that they've been in 50 years. If you remove the unusually large adjustments that they put into this report, and include just the adjustments compared to normal years in the previous years, the unemployment rate would have actually increased instead of gone down. 

Number two, the biggest job gains in this report were among 16 to 19 year olds in the month when school started. Now, you'd expect to see these gains in the summer, but not in September. And on top of that, while hourly earnings did increase, the report also showed that hours worked declined. 

So, while wages went up, hours went down, making the net effect pretty much neutral. So, people aren't necessarily making more money overall, they're just working less hours for the same total income. And while that might sound good on the surface, with prices continuing to rise, this isn't exactly great news for the consumer. 

Okay, so what about GDP? Well, the US deficit just hit 1.8 trillion for the fiscal year of 2024 so far, which is 6.4% of GDP. And that's the largest yearly deficit since the height of COVID in 2021. It's also 139 billion higher than last year, and 400 billion higher than in 2022. 

And oh, by the way, government spending has also increased by 10% in August compared to this time last year, pushing total spending to $6.8 trillion this year. And the total debt has risen by 2.2 trillion over the last year, reaching an insane $35.7 trillion. So, while GDP is up 3% in 2024, if you subtract the deficit spending, the real GDP is actually down by over 3%. 

It's kind of like saying that your household income increased 50 grand because you got a new credit card with the $50,000 limit, because it's debt. It's not real income. And remember, government debt affects mortgage rates more than most people realize. 

Mortgage bonds that drive mortgage rates are in direct competition with US treasuries in the secondary market. So, when the government takes on more debt, they have to issue more treasuries, and higher debt loads make investors perceive more risk. So, treasury yields need to rise to attract buyers. 

And when treasury yields rise, so do mortgage bond yields, and then mortgage rates follow. Now, what about inflation? Well, prices are still rising, or at the very least, not falling as quickly as we need them to. Everything is expensive, which is why the New York Fed reported last week that the probability of a consumer missing a minimum debt payment over the next three months has risen to 14.2%. And that's up from 13.6% in August.

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And that's the highest level since April of 2020. And if you take out the pandemic, it's the highest since 2017. And the real concerning part about that study is that this increase is most pronounced among households with annual incomes over $100,000. 

However, though, much of the inflation, at least right now, is being driven by the shelter category, particularly rent and homeowner's equivalent rent. And these numbers tend to lag because But they are expected to come down over the next six months, which could help ease those inflationary. So I know I'm all sunshine and rainbows on this thing, and it all sounds bad, but there is good news in all of this, at least as it pertains to mortgage rates. 

If the economy isn't as strong as it seems, and the Fed is aware of it more than we are, it's likely that rates will come down as the Fed continues to cut. And if the economy deteriorates, as many still think it will, we could see mortgage rates drop pretty significantly. Number two, historically, over the last 40 years, whenever the Fed cuts rates, the 10-year treasury yield temporarily spikes up like it has recent, but then shortly after comes back down by about 37% on average. 

So based on this history, the 10-year yield should drop by about 2.35% sometime in the near future, which could get mortgage rates down to around four and a half percent once the spread normalizes. So the takeaway here is hold on just a little bit longer. Rate relief is most likely on the horizon, and that could be a huge factor for buyers who've been sitting on the sidelines. 

With rates potentially dropping into the fives or even the fours next year, things could look a lot brighter for the housing market, but only time will tell. All right, now let's dive into what's happening in the US housing market right now, because there's quite a bit to unpack here. So we're getting some mixed signals, and it's creating an interesting landscape for both buyers and sellers. 

So according to Mike Simonson from Altos Research, we're seeing some signs of life in the housing market, small but meaningful. The number of homes under contract has risen slightly, climbing for the last few weeks, but since then have taken a sharp decline down by about 16% compared to last week. The rise in rates are certainly to blame for this, but also possibly. 

Redfin reported earlier this week that 26% of first-time homebuyers are now waiting for after the election to see if there's going to be that $25,000 grant that was promised to them to help them buy a home before they decide to make a move. So that's just another indication on how the election is kind of holding things in freeze mode for right now. Now, while we did see a slight bump in home sales, it was small and kind of short-lived, at least for now, but it's still a sign that we are recovering, even if not in quite a straight line. 

And in this market, we'll take any kind of signs of life we can get. Simonson also pointed out that these pending home sales are up about 6% from this time last year, and right now there's about 362,000 single-family homes under contract. But the bigger question here is, is this momentum going to keep up? Right now, it doesn't look like that since rates have climbed and the election's looming. 

So the fourth quarter might still be a little bit bumpy for this year. But if you've been in the housing market for any period of time, the fourth quarter is really never anyone's friend. Now, inventory is another piece of this puzzle that's beginning to climb.

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We're still seeing more homes coming onto the market, 63,000 new listings last week alone, but it's still a relatively healthy pace compared to this time last year. In fact, inventory is up 6% compared to this time last year, which leads people to think that the housing market's headed in the wrong direction, but this is a good thing because we need more inventory to bring down home prices. But with things like Hurricane Helene having just hit a big chunk of the country and Hurricane Milton also causing damage, but thankfully not as bad as expected, we could see a decline in inventory in places like Florida, Tennessee, Georgia, and North Carolina because natural disasters always kind of throw a wrench into the market, among other things, obviously. 

But we are expecting to see inventory numbers start to drop as a result of this. So what about home prices? Well, they are holding steady, which is somewhat surprising given how weak demand has been at times this year. According to CoreLogic, home prices were only down by 0.1% in August, but year over year, they're still up almost 4%. 

CoreLogic is also forecasting only a modest increase of 0.1% for September and a 2.3% rise for the next 12 months. Now that is pretty conservative, but it's showing that prices are still going up. So we're just not seeing some of the big price corrections that many home buyers were hoping for, which is why adding more listings is a good thing. 

And the median price for homes and pending contracts also ticked up for the third week in a row and is now sitting just under $390,000. And that's a good sign for sellers because it means buyers are still willing to pay competitive prices for the right property. Now, here's a couple broader trends to kind of keep an eye on. 

So this year, only 25 out of every 1,000 U.S. homes have changed hands between January and August. And that's the lowest turnover rate that we've seen in at least 30 years. And it's just a further sign that the U.S. housing market is essentially frozen right now. 

Elevated mortgage rates, record prices, election year, and low supply of homes are the biggest culprits behind this. And it's worse in places like Los Angeles. Just 15 out of every 1,000 homes changed hands in the first eight months of this year. 

And that's the lowest turnover rate among major metro areas. And on the other side of it, the rate of homes being listed in that area is also at the lowest level that they've seen in 12 years, just 32 out of every 1,000 homes. So while there has been a bit of movement in the market with purchase applications, it's still very low and slow compared to historical standards.

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We're about 30% below pre-pandemic levels in terms of home sales. Now, one area that has seen a lot of action is refinancing, at least up until last week. Refinances are down 25% from last week, but are still up a staggering 110% compared to this time last year. 

And right now, refinances are making up about 55% of the total mortgage applications. And this is the highest level of refinance activity that we've seen since April of 2022. Why? Because rates have come down more than 1% over the past few months. 

And homeowners with higher rates were trying to take advantage. But after rates ticked up back above 6.5% last week, we should expect that trend to fall off pretty heavily. But let's not forget, mortgage rates are still high by recent historical standards.

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So while rates have improved over this year, they're still keeping many home buyers on the sidelines. And it's taking time for these lower rates to translate into more purchase activity. I would personally expect it to take rates to get down to the low fives to really start seeing people get off the sidelines and list their homes to try and buy again. 

So where does all this leave us? Well, the housing market is thawing, but very, very slowly. It's still constrained by higher mortgage rates, limited supply, and prices that remain stubbornly high. We're seeing a few signs of recovery, but don't expect a massive shift anytime soon. 

As we head into the end of this year, all eyes are going to be on whether this momentum carries into 2025. And remember, as Mike Simonson points out, the housing market can change fast and smart decisions need to be made with the most up-to-date information. So keep an eye on rates and inventory levels and have your clients prepared to move when the time is right. 

Okay, next, let's dive into an important topic that isn't immediately connected to real estate, but does have long-term implications for housing and the broader market. The ongoing decline of the U.S. birth rates. How will fewer families and delayed parenthood reshape housing demand? The latest data on birth rates might surprise you. 

So according to CDC data, the U.S. birth rate hit record lows in 2023. Just 3.6 million babies were born, marking a 2% drop from the previous year. And that might not seem significant at first glance, but this drop represents a continuation of a much larger trend. 

The total fertility rate, which is how many children each woman has over her lifetime, also fell to just 1,616.5 births per 1,000 women. And for the U.S. population to sustain itself without immigration, the fertility rate needs to be 2,100 births per 1,000 women. And we've been below that threshold since 1979. 

Now, why does this matter to realtors in the housing market? Well, fewer births mean fewer families being formed. And fewer families mean down the line, less demand for family size housing. Now, this won't hit immediately, but over the next decade, as family formation continues to slow, we could see shifts in the types of housing that are in demand. 

If fewer large families are being formed, we might see more demand for smaller homes, condos, or even urban living spaces that cater to single or child-free couples. Another factor that's impacting this is that women are having children later. In 2023, birth rates were highest among women aged 30 to 34, with 95 births per 1,000 women. 

This shows that people are delaying starting families. And this is largely due to social and economic factors like longer time spent in school, delayed marriage, and career building. Not to mention the cost of living being significantly higher than in recent years. 

So, from a housing perspective, this can mean that buyers may be entering the market later in life when they're more financially stable and potentially looking for different types of homes. Realtors need to be prepared for a future where first-time homebuyers might be older and looking for homes that reflect their later stages in life, possibly opting for properties in suburban areas after spending their younger years renting or living in urban centers. And teen birth rates are also at an all-time low, with 13 births per 1,000 teens aged between 15 and 19 in 2023. 

And, of course, many of us would argue that this is a good thing. But it just continues a broader trend of fewer young parents, which means that younger generations may not be moving into homeownership as early as in the past. The trend could potentially keep the average age of first- time homebuyers moving upward. 

And not to get political here, but a significant recent development is the role that abortion bans are playing in birth rates. You see, with the recent repeal of Roe v. Wade, states with tighter abortion restrictions saw 32,000 more births than expected in 2023, with a 2.3% higher fertility rate than states without bans. So, from a purely housing and population standpoint, this could be looked at as a positive thing. 

Some states, like Texas, for example, might see local housing booms from a higher birth rate, while others may continue to experience slower population growth. And this shift could lead to localized housing demand increases in states with more restrictive abortion laws, as families in those areas might grow more quickly than in others. Time will tell. 

And again, this isn't a statement in one way or the other on these laws, but simply just what the data is showing related to population growth and what that can mean. And on the flip side of this issue, the CDC's report also shows that prenatal care is worsening for these mothers as well. With more women receiving either no or limited late-stage care during pregnancy, this could signal larger economic challenges affecting younger families, possibly reducing the financial stability needed for purchases. 

And as the housing market often correlates with economic well-being, it's certainly something anyone in the real estate industry should keep an eye on, particularly in lower-income areas. So, what does all this mean for real estate? Well, the continued decline in birth rates, alongside delayed family formation and policy shifts around abortion, points to long-term changes in housing demand. Realtors looking to prepare their business for the future should be ready for smaller family sizes, older first-time homebuyers, and regional population shifts. 

These demographic trends are going to change the types of homes and locations that are in demand, possibly for years to come. Look, in the short term, nothing's going to change drastically, but looking ahead, it's essential for real estate professionals to understand how these shifts might impact housing markets and buyer behavior, and adjust their business and marketing plans accordingly. Rates and prices are the enemy of housing right now, but the shrinking and delayed family formations might be the next big threat to our industry lurking right around the corner. 

Okay, next up, got a question for you. Is Texas still affordable to homebuyers? Well, you might be shocked to learn what it costs to live comfortably in Dallas or even Arlington today. So, a recent study by GoBankingRates found that in Dallas, the annual income needed to live is about $93,482. 

That puts Dallas in 27th place nationally for the cost of living, and it's the second most expensive city in Texas, just behind Austin. To break that down, the average Dallas resident spends about $46,741 a year on essentials like housing, food, and transportation. So, if you're working with buyers in Dallas, they need to be earning close to six figures to really feel financially comfortable. 

Now, it does get slightly more affordable when you look at nearby cities. Arlington ranked 30th nationally with a cost of living at about $92,000. And Fort Worth came in at about $90,000, ranking 32nd. 

And while these cities offer slightly lower living costs, it is clear that North Texas as a whole remains one of the most expensive areas to live. Now, this contrasts with cities like Houston, San Antonio, and El Paso, which are among the more affordable cities in the state. El Paso, for instance, is the cheapest major Texas city with a cost of living around $74,721. 

And that's a huge difference compared to Dallas or Austin. In fact, El Paso was ranked the sixth most affordable city among the country's 50 largest cities. And looking at the bigger picture, California continues to dominate the list of most expensive cities. 

Residents in cities like San Jose and San Francisco need to earn more than $250,000 to live That's more than double what's needed in Dallas and probably one of the reasons why they have the highest homeless population in the country as well. So what does this mean for real estate? Well, as home prices rise, especially in places like North Texas, buyers are going to be more concerned with affordability. And affordability affects not just home prices, but lifestyle decisions from how much space people can afford to where they actually want to live. 

So if you're working with clients or even just looking to move yourself, understanding the financial landscape is going to be crucial. For some, the idea of buying a place in Dallas or Fort Worth might be out of reach and therefore might consider more affordable areas like Houston or El Paso. So if you're looking to buy in Texas or have clients relocating here, having this information at your fingertips is key. 

And sharing these insights with your clients can help them understand how shifting from one population center to another in this massive state can significantly impact their monthly mortgage budget. And if you're a realtor, this is the kind of market knowledge that you need to have in your toolkit. It shows your clients where your expertise is worth every single penny. 

Stay informed, keep up with these changing trends, and remember, you're the professional that they're counting on. All right, let's get into the heart of today's episode. So rates have gone up recently and right now refinancing is not really top of mind for most folks, but sometime very, very soon they will come back down and you don't want to miss the bus on lower rates again. 

So now is the time to start thinking about it. Before you jump in, however, it is crucial to understand the step-by-step process so you know what to expect and how to make the best financial decision for your home when the time comes. So whether you're looking to lower your monthly payments, tap into your home's equity, or even just want to know how it all works to better serve your real estate clients, today we're going to walk through the entire refinancing process, breaking it all down so you can feel comfortable and informed every step of the way. 

So let's get to it. Step number one, assess your financial situation. This just means take a close look at your credit score, your debt-to-income ratio, and how much equity that you have in your home. 

You see, your credit score plays a huge role in the rates and the loans that you'll qualify for. Generally, lenders offer the best rates to homeowners with a score of 700 or higher, but even if your score is lower, there may still be good options available. FHA loans and VA loans don't penalize as much for lower credit scores when it comes to interest rates, but they do come with their own refinancing downsides, like forever mortgage insurance and funding fees.

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Now, your debt-to-income ratio evaluates how much money that you make on a monthly basis, and it's calculated a little differently depending on your job and how you get paid, and how it compares to your monthly payment obligations as reported on your credit report. You see, things like car insurance and utility bills aren't generally considered as part of your debt-to-income ratio in most cases. And even though you qualified for your loan when you bought your home, if your income has changed or your debt has gone up, you might not be eligible to refinance even if you haven't ever missed a payment. 

Unless, of course, you do a streamline. Check out my video in the description for information on that. And the third piece of this assessment, how much is your home worth compared to what you currently owe? This is otherwise known as your loan-to-value. 

You see, if your home's appreciated in value since you bought it, then you might be in a great position to refinance, because the more equity that you have in your home, the better refinancing terms that you'll often qualify for, because a lower loan-to-value ratio can signal less risk to lenders. Plus, the more equity you have, the less likely that you're going to have come out of pocket to do the refinance. But a little more on that later. 

Step number two, shopping for lenders and rates. Now, once you know your financial standing, the next step is to shop for the best terms for your loan. And notice I didn't say the best rate, because terms include not only the interest rate, but the cost to get that rate and do that loan. 

Now, don't just accept the first offer that you get. Calling around and talking to other lenders could not only save you thousands over the life of your loan, but also hours and hours of headaches and stress dealing with some internet lender who doesn't call you back, changes the terms on you every time you talk to them, and ultimately doesn't put you into the best loan terms for your personal situation. And oh, by the way, the bank that you currently have your loan with is typically not the best place to start. 

You can always call them once you've talked to a few other lenders, but those banks typically specialize in servicing your loan, not finding the best loan for your particular situation when it comes time to refinance. Now, while rates are the ultimate measure of the deal that you're getting, it isn't the only consideration. Talk to the lender and make sure that your gut feels good about dealing with that human being. 

Because as my favorite country singer, Sturgill Simpson once said, if there's any doubt, then there is no doubt. The gut don't ever lie. And the only word that you'll ever need to know in life is why. 

Love that dude. Oh, and if you don't know where to start in looking and trying to find a good lender, here's a tip from Mike. Ask your local realtor. 

They know them all. The good, the bad, and the ugly. And they'll have great recommendations for you in your search. 

Step number three, applying for the loan. So once you found the right lender and terms, it's time to apply for the loan. And another Mike tip here. 

If the lenders that you talk to in your search can't or won't quote you some idea of the rate in terms that you're going to get based on just speaking with you, or at least until you fill out the application, then that lender ain't the one. Anybody that knows this business can chat with you on the phone, find out about your current situation, and give you a ballpark idea of what to expect. But when it comes to the application process for refinancing, it's very similar to what you did when you bought your house. 

You're typically going to need your most recent tax returns, pay stubs, home insurance information, copies of your IDs. And really you need some details about your current mortgage, like your most recent mortgage statement. Because having these documents ready to go is going to make the process go fast and smooth. 

And right now they say on average, it takes about 30 to 45 days to close a refinance. I would argue that you can typically get them done within about three to four weeks and even faster in some cases. So if you're aiming to get access to that equity or even reduce your monthly payments before a certain time, like say before the holidays, it's important to start as soon as you can. 

Step number four, loan processing and underwriting. So during the loan processing phase, the lender is going to verify all your financial information through a process called underwriting. This is where your credit income and home appraisal, if you need one, are going to come under review. 

The lender's underwriting team is going to assess all the risks of refinancing your loan based on the type of loan that you applied for. And they're going to determine if your financial situation, including your credit and income, qualifies you for the refinance. Another mic tip here. 

If you have a good loan officer who walks you through all of this in the beginning and knows their stuff, underwriting is really nothing more than a formality because all of this will have been established and handled ahead of time. Also, side note on the appraisal. So many refinances are going to require a new home appraisal to confirm your property's current value. 

This is just part of the process because the appraisal is crucial and it can impact the loan amount you qualify for, especially if your home's value has increased or decreased since you first bought it. However, in some cases you can get the appraisal requirement waived. And it often depends on how much you own your home and what type of loan that you're applying for, like a streamlined refinance, for example. 

Again, link to streamlined refinances in the description. And finally, step number five, closing the loan. Once your loan's approved, the final step is closing. 

This is where you're going to sign all your paperwork and pay off that old loan to start the new one. Now you can expect closing costs are going to range somewhere between probably three to 5% of your loan amount. And these costs are going to include things like appraisal fees, title insurance, and origination fees from the lender.

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Now, many lenders allow you to roll these costs into your loan depending on your equity position. And that goes back to the whole LTV discussion. But keep in mind, this will increase your overall loan amount and the payment because you are financing these costs. 

Now, after closing, there's going to be a three-day right of rescission if you're refinancing your primary residence. This means that you can cancel the refinance even after you sign everything within three days if you change your mind for any reason. So just be sure to review everything very carefully.

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Oh, and the good news is, is after the refinance, you're going to get to skip one mortgage payment and not have to pay it for that month. And if you time it right and talk to your lender about it, sometimes you can skip two. So be sure to ask them about that as well.

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Okay, that's it. Refinancing can seem like a very long and complex process, but when you break it down step by step, it becomes very, very manageable and simple. Whether you're assessing your financial situation or closing on the loan, understanding each phase is going to help you and your clients make smarter financial decisions when the time comes.

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And if you're thinking about refinancing or want some personalized advice on the process, don't hesitate to reach out. I am here to help in any way that I can. Because with the right strategy and timing, refinancing could save you thousands of dollars and help you better manage your finances and your mortgage. 

So give me a call. Let's talk about all your options. So you are ready when those rates finally come back down, which they will.

(33:03 - 33:59)
All right, guys, that is a wrap for today's episode. I hope you found our deep dive into mortgage rates, refinancing and the shifting housing market, both insightful and useful for your knowledge toolkit. Whether you're keeping an eye on current mortgage rates or getting ready to guide your clients when the rates do drop, staying informed is the key to making the best financial decisions for you and your customers. 

Don't forget to join me on Friday as I welcome Chris Sockleben to the podcast. Chris is a real estate entrepreneur who grew his online network from zero to over 300,000 members in just a couple of years using Facebook groups. He's going to show us how and why he did it and why anyone with just a little bit of hard work could do the same thing. 

So if you want to keep your business growing, you don't want to miss that episode. I want to thank all of you for tuning in and being a part of this community. If it wasn't for you, we wouldn't be where we are today. 

So thank you. And as always, be good humans. Just keep grinding. 

Life is what you make it. So make it great. See you next time.