Is now a good time to refinance? Hmm, as I ask you this question, it's September 2023, so very important that you guys know that. Is now a great time to refinance? No, guys, it's literally one of the worst times to refinance, I would say, at least since I've been in the mortgage industry, so 15 years. It's a horrible time to refinance. So, whenever you guys get someone mailing something to you that says, "Thinking about it," I want you to tear it up, tear it up. That's right, that's right.
So, if I look at who would be eligible for a refinance right now, it's no one, it's zero. Like, could you be eligible, can you like hurt yourself financially? Yeah, you totally can. There's a lot of lenders encouraging you to do that. They're saying, "I know your rate's four percent, but you know you can go a little higher and you can have a beautiful kitchen and bathroom." Guys, you are going to be paying so much more for that kitchen and bathroom for the rest of your life because of how much higher rates are now than they were in 2020 and 2021.
You know, really, if I'm looking at who's going to be a potential refinance in the future, it's people from the mid to end of 2022 and this year. That's who, when rates drop, you know? And look, do I think they're going to go back to two or three? No, I don't. But then again, I never thought COVID would happen, so if something catastrophic could happen again, sure, do I think it will? Probably not, okay? So, you know, I think that realistically, you're going to be, as a lender, I'm going to be refinancing people from the mid of 2022 through this year, okay? Anyone before that likely has a rate that's dramatically lower than where the market is right now.
Now, you guys are getting advertisements from lenders, we talked about this, we already told you to tear them up. Here's the other thing I'll see. I'll see people where they go, "Well, look, I really just want to pay off my car payment." The only time you guys should be doing a debt consolidation, taking equity out of your house to pay your debt, is if you have no other options, no other options, okay? I cannot stress that enough because you may go, "Well, bring my payment down 200." Guys, you're putting consumer debt into a 30-year mortgage. You're taking a lower rate and making it a higher rate on the bulk of your debt. It is not a good idea.
Now, have I had some people this year where we have done refinances because they're in such perilous circumstances that there's no options? Yes, but is it something I would encourage? No. And look, there's a lot of lenders right now saying, "Oh, you should just combine your credit cards and your student loans," and like, "Yeah, your rate's really low, but rates are going to go down soon, and then it'll just be the same, so just be high for a little while." That is, no lender knows when rates are going to go down or how much they're going to go down. So, anyone who's selling you, "Hey, give up that really good rate, you know, they're higher right now, but they're going to be lower," do I think rates are going to go down? Yes. Do I think they're going to go down to where they were in 2021 and 2020? No, absolutely not. I don't. I don't. I don't think that if we hit like five and a half, we're going to see huge activity in the real estate market. I don't see how we get below that. Do I think that maybe we could get there next year? Sure, sure. But there's way too many factors for a lender to have any clue definitively what's going to happen.
And do I get really worried about this? Yeah, I do, because I know there's people with two and a half percent rates. You know, I was talking to a gentleman the other day, he had been talking to another lender, and he said, "Hey, I want to take money out of my house, I want to update the bathroom and kitchen." Lender's like, "Okay, cool, no problem." He has a two and a half percent interest rate right now, guys, and they're just like, "Yeah, sure, let's just do it, yeah, your rate's going to be higher, but we'll charge you a couple points," which is all like taking more of your equity, right? "It'll be fine." And look, you guys have the right to do that. A lender can't say no to you, but my conversation with him was different. It was, "Please don't." But then I followed it up with math, okay? I said, "Look, this is what your payment would be with new rates, this is what your payment is now. Do you want to pay that much more monthly?" You know, and in this case, it was like two thousand dollars more a month because of how much the loan was and because of where the rate was going, you know, to and from. Is it worth it to you? Absolutely not, absolutely not. It was just, no, no, no, no, no. The other lender never did the math, they never did the math, they never showed him the payment, they just said, "Yes, sir."
And look, in fairness to that other lender, you know, that is how this industry is. This is what this industry is moving towards, right? They're trying to do AI for everything, they're trying to get everything to be a call center. You guys say, "I want yes," right? There are less and less mortgage lenders who are actually thinking long term with you guys and asking you guys those hard questions, um, because it's not where the industry wants to stay, it wants to stay, because think about it, right? How much money did my mortgage company that I work for make off of me doing that call? Zero, zero. Because I said no, let's do some math. And then if you really want to do this, we can talk about it, but this sounds terrible. Here's why, right? How much would that call center company have made had that guy not called me in and they just talked to him? Thousands of dollars, guys, thousands of dollars, right? So, you guys really need to be aware that you may go, "Oh, well, Philander thinks this is really silly," they're not, not necessarily.
So, right now, I'm going to say this, and I'm going to mean it, and I hope that you guys understand. It's in your best interest if you have one of those crazy low rates, one of those two percent, three percent, four percent rates on a 30-year fixed, I want you to hold it in your arms like a baby, and I want you to marvel at how magical and beautiful and wonderful it is, and I do not want you to give up this baby unless you have no other choice, okay? So, like, look, if you have to get money out of your house because you have to pay for medical treatments or someone's going to die, yeah, that makes sense, take the higher rate. But if you want to just consolidate a little debt or get a pool, I think once you see the math, you'll change your mind, okay?
Last thing to wrap this up, home equity lines, look, I had mixed feelings on them. So, if you have one of those really low interest rates and you're like, "Jen, I really want to do my bathroom, though, and I'm not going to give up on this," I would say, hey, see if you can do a home equity line first, okay? Now, some home equity lines are locked, it's going to depend on the lender. We have one that's locked, it's not available in every state, I have some videos on it, so you know, at least make sure it's a payment you can handle if you go that route. As a lender who's been doing this for a long time, a lot of the refinances we do end up doing are combining a first and a second, so a first in a HELOC, because a lot of times people are picking those home equity lines of credit that are adjustable or that are interest only for the first few years, and then when the real payment hits, they can't afford it, so then they have to give up that first mortgage and combine it into one. So, if you guys are going to go the home equity line, really, I would suggest you look for a fixed product that you can afford the payment, okay? And if you decide not to go the fixed route, then just make sure that you understand what that fully amortized payment is going to look like and you can handle it, and you do some worst-case planning, just so you don't end up in the position where, once again, you're giving away that sweet baby.
So, I hope this video was helpful, please, if you guys are getting some scammy mail or if you have some lender hard-pitching you, and you're like, "God, it does sound just call me," and look, I'm always nice, but I do ask tough questions, and sometimes it does make sense to refinance, but is 2023 the year of the refi? No, 2023 is probably, and this is the year that I've done the least refis in, and I've told the most people they should not refi. I would argue this is the worst year for refis in 15 years, and it should be. It doesn't make sense. Thanks for watching, guys. I'm licensed in 48 states, feel free to reach out, you can get on my calendar, you can talk to Sandy and Alyssa, they'll also tell you, you know, okay, where yet, we go through this stuff, so we're here to help you guys, we want to help you be financially successful. Thanks for watching.
https://www.youtube.com/watch?v=bD4vk0u2ADE