Last year, we had the pleasure of working with a client referred to us by a trusted partner and friend. When we first connected, we quickly analyzed their situation and identified some opportunities to improve their financial outlook. Despite having a mid-600s credit score (around 624), we were able to put together a plan that leveraged their equity position.
Our client was carrying slightly over $100,000 in consumer debt, but we accessed only about 70% of the home’s value, allowing us to pay off the existing mortgage and the debt. While this did result in a higher rate of 7.5% on a 30-year fixed loan compared to their previous 3.5%, the debt consolidation brought significant relief. They ended up saving over $2,200 per month! We advised them to channel those savings into a better financial strategy—building a stronger savings account and cutting down to just two essential credit cards.
They followed our advice to the letter, and it was a win for everyone involved. Recently, with interest rates starting to drop, I reached out to check in on their progress and to perform a soft pull on their credit. I was pleased to see their credit score had improved significantly to around 730, but I quickly learned that I hadn’t done a great job of staying connected after closing on the options.
The client mentioned that their loan had been sold to another lender (servicing lender, collects payments), who had reached out just a month prior to offer them a refinancing deal. Initially, I thought, “Great, they’re saving money!” But as we dug into the details, it became clear that the situation wasn’t as favorable as it could have been.
The servicing lender had charged the client another $4,800, adding it to their loan balance. Even more concerning, they kept the client in an FHA loan with a $340 monthly PMI/MIP fee, despite the fact that the client had 20% equity and a much-improved credit score. The lender reduced their rate by 0.75%, but at the time, the market had dropped by about 1.25% based on their scenario. They took the easy route, leaving the client with a suboptimal loan that saved only $230 per month when we could have saved them $670 per month.
This experience was a tough lesson in the importance of not just staying in touch but being clear about our ongoing commitment to our clients plan regardless of where payments are made. It’s not enough to deliver a great plan and close the deal—we have to ensure our clients know that we’re here for the long haul, watching the market and ready to step in when there’s a better opportunity.
In this case, had we stayed connected about alternatives to the plan that may come up, our expertise could have saved the client significantly more each month vs the easy move to just streamline. Moving forward, we’re doubling down on our commitment to proactive client care—because a good refinance isn’t just about saving money; it’s about making sure our clients get the most out of every opportunity.