You tell the client who bought at 7% to sit tight for six months or a year, because that is what everyone says refinancing requires. A rate-and-term refinance has no seasoning period at all, and the waiting periods they heard about apply to taking cash out or using a new appraised value.
A viewer asked the lender on the show a plain question: how soon after buying with a conventional loan and 20% down can you do a rate-and-term refinance?
The answer was "You can do it immediately." The waiting periods people have heard about are real, but they are for something else. "There's waiting periods for cash out" and there are waiting periods for using a new appraised value: "either six or 12 months waiting period on both of those to be able to use assessed value and or to take cash out." On a straight rate and term, "But in terms of a rate and term, you do it a week later if you'd like to."
The host had done exactly that on his own house. "I did a refinance before my first payment was ever due" — "It closed in November. My first payment was due January 1st." By the time that first payment came around he had already refinanced and, in his words, "taken the payment down like 400 bucks."
He did not pay closing costs twice either. On the refinance he took a rate slightly above the best available that day: "I took a slightly higher rate. Lender gave me a credit, paid for the cost." His first loan was at 7%; the refinance came in at six and a half.
“I did a refinance before my first payment was ever due”
Every client who bought in the last two years at 6.75% or 7% is sitting on the assumption that they are stuck until some anniversary passes. They are not, and the person most likely to tell them is you, because the lender who wrote the loan is not going to volunteer that it could be replaced next week.
The part worth repeating to them is the credit. Taking a rate a notch above the day's best can generate enough lender credit to cover the costs, which means the break-even question disappears and the only thing left to compare is the payment. It also means a refinance is not a one-time event — it can happen again the next time rates move.