You don't need a mortgage, ma'am.

Huh? Did I just say that? I've been in the mortgage industry for more than a decade and rarely suggest that clients don't need my services.

After all, I'm a loan officer. I don't make money if I don't make loans, right? It's akin to a real estate agent saying that it's not a very good time to buy or sell a house. It rarely happens. But there are times when getting a new mortgage or refinancing simply does not make sense.

I received an inquiry from a woman living in New Mexico who wanted to refinance her mortgage. Her current rate was 8.75% and she could get a rate as low as 6.75%, exactly two percent below her current mortgage rate. No-brainer, right? Not really.

After a brief interview a few particulars were uncovered. Her credit was excellent, she owned the home as her primary residence and she currently had a 30-year fixed rate. She bought the home about 6 years ago and had been paying every month a little extra. In fact, she paid a lot extra. She bought the home for just over $100,000 and put $30,000 down, but since then had paid her mortgage down by nearly $50,000 leaving her mortgage loan balance at $21,000. Her current mortgage payment would drop by nearly $300 every month, savings tons of interest over the term of the loan.

I suggested she not refinance, and keep the old loan. Why?

Yes, she would save mortgage interest over the life of the loan, but the way she was paying her mortgage down, she would never come close to carrying the loan to term. In fact, she had every intention of having the loan paid off within a couple of years.

So what's the use of getting a lower rate if the loan would be paid off so soon, especially in light of the associated closing costs? None, really. The way I looked at it, she saved $2,000 by not refinancing -- money she could use to pay down the remaining loan balance.

Just last week I received an inquiry from a lady who lives in Virginia, who wanted to buy a vacation home for about $75,000. Again, after a short interview I discovered that she was hardly hurting for cash. In fact, she had somewhere in the range of $5 million in liquid reserves and several million more in real estate.

"Sorry," I said. "Before you make a mortgage decision, talk to your financial planner." I want to say here and now that in no way would I offer financial advice to any consumer, it's not my area of expertise. But it was apparent to me that with a woman of such financial stature a small mortgage loan may not be in her best interest.

Her financial planner agreed. She didn't need a loan.

A big part of lending is finding the one loan which best serves a borrower. Sometimes it's easy to make a fit, sometimes it's a struggle, and sometimes you just have to say: "I'd love to have your business, but this is one case you're better off without my services."

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