If rates come down in the next three years, Rocket Mortgage’s program will cover some refinancing costs including first appraisal, credit report, tax certification and the mortgage recording fee.

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With mortgage rates more than doubling during the last year, the nation’s biggest mortgage lender is assuring homebuyers that they’ll get a break on refinancing if rates come back down in the next three years.

Rocket Mortgage says its Rate Drop Advantage program should save the average borrower about $2,000 when they refinance, after a closing credit is applied to cover some refinancing costs including the first appraisal, credit report, tax certification and mortgage recording fee.

Bob Walters

“Rocket Mortgage is committed to creating more ways to make the financing process easier and more affordable for homebuyers and maintain the excitement that should come along with this huge milestone in their life,” said Rocket Mortgage CEO Bob Walters in a statement. “Innovation comes in many different forms – Rocket Mortgage is known for both our revolutionary technology and the creativity we bring to help meet the needs of our clients, like Rate Drop Advantage, RateShield and our Verified Approval. We are constantly listening to our clients, implementing their feedback and developing programs that meet and exceed their needs.”

Closing costs typically amount to 3 percent to 6 percent of the loan balance or $9,000 to $18,000 on a $300,000 mortgage, Rocket Mortgage acknowledges in detailing the Rate Drop Advantage program on its website.

But “If you can save a chunk of that, it makes the decision to refinance and take advantage of lower rates that much easier,” the company says.

There’s one other catch: To qualify for the Rate Drop Advantage program, borrowers must have locked their initial rate when buying a home using Rocket Mortgage’s RateShield — it can’t be retroactively applied to existing loans.

Rocket’s RateShield program allows borrowers who have received a verified approval to lock in an interest rate for up to 90 days while shopping for a home. If rates fall during that time, they can lower their rates once during the 90-day rate lock period. A verified approval requires a comprehensive analysis of the borrower’s credit, income, employment status, assets and debt.

Mortgage rates ease

Since more than doubling from historic, pandemic-induced lows, rates for 30-year fixed-rate loans have eased somewhat from a 2022 high of 6.06 percent registered June 14 by the Optimal Blue Mortgage Market Indices.

Although the Federal Reserve is expected to continue raising short-term interest rates this year to fight inflation, some economists project that the Fed’s efforts to tame inflation could spark a recession, which would give long-term rates room to come down.

Another approach for homebuyers who think mortgage rates have already peaked or may reverse is to take out an adjustable-rate mortgage (ARM). Demand for ARM loans has more than tripled from the first half of 2021 to the first half of 2022, according to a recent analysis by the loan marketplace LendingTree.

The nation’s largest wholesale mortgage lender, United Wholesale Mortgage (UWM), on Wednesday announced the launch of Prime Jumbo Max ARMs, touting “Prime Jumbo Max pricing with the flexibility of a 7- or 10-year ARM.”

UWM says Prime Jumbo Max ARM loans of up to $3 million can be used to finance primary and second-home purchases, as well as rate-and-term or cash-out refinancing.

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

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