Do you own a home AND… additional debt? As interest rates continue their climb upward, I have been asking myself, “Why would anyone still want to refinance their home mortgage?” While the optimist in me battled to silence the pessimist, I was able to come up with a few ideas and listed them below.
If any of these apply to you, please give me a call today. I will put you in touch with an expert mortgage broker whom I trust.
The “What’s, How’s and Whys for a Refi in 2017
- Renovation loan: Use this loan to build equity in your home. With the enhanced value of your home, you will now be able to pull newly added equity out to use for needs and other opportunities without incurring monthly mortgage insurance.
- Cash-Out Refi: With interest rates on a 30 year mortgage still low, why would you choose to pay the higher interest rates on revolving debt? The interest rates on some credit cards can be well over 20% while the typical rate on a 30 year mortgage can range between high 3%’s to low/mid 4%’s…. STILL!
- Financial investments: Win your next bid on an investment property by going in “Cash Strong.” Pulling equity out of one property to buy another with cash is such a way. Not to mention, the many other investments out there offering greater returns on your money. Using your real estate’s equity is just another way to broaden your portfolio. As these rates continue their rise the ROI decreases.
- In lieu of College loans: Our generation’s youth, and in many cases their parents are riddled with student loan debt. After years of hard work in school and a buildup of enthusiasm to start a career, your greatest asset could be the instrument you use to solve potentially their greatest debt problem.
- Improve reserves and liquid assets: Are you prepared for the potential financial disaster awaiting you around the corner? If you were faced with a financial burden, would you need to use credit cards or drain your personal savings? If so, why not liquidate some of the equity you have been paying into all those years and have peace of mind at maybe even a lower payment?
- Making large payments to IRS for taxes: Self employed entrepreneurs will understand this one.
- Removal / Replacement options for expensive monthly PMI: If you have been paying mortgage insurance for any given amount of time, you may be eligible to remove it sooner than you realize. We are currently in an appreciating market, and as you pay down your mortgage and the home values continue to appreciate, you could have the 20% equity in your home and not even realize it.
- Mitigate property tax increases or solve escrow shortages: Along with interest rates and property values, our property taxes are also on the rise. If you have been recently hit with an increase in payment because of an escrow shortage, you can resolve that issue now instead of waiting 12 months.
- Rate and term refi to save money monthly and to create “disposable income:” We all want to make payments above the minimums, but not all of us can. One reason is we need every last dollar we make to make those payments. Reducing your payment by “X” and using that savings to put towards your payment of “Y” would reduce the amount of total interest you pay on that debt and shorten the time frame of the payment schedule. Once that debt is paid off, you can enjoy the savings each month, or invest in other money making opportunities.
- To take advantage of these lower rates before they rise again! No explanation needed here.
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Chris Whalen, CPA
79 Oak Hill Road
Red Bank, NJ 07701