How Can You Secure A Better Interest Rate When Refinancing Your Home Loan?

February 25, 2022 by

How Can You Secure A Better Interest Rate When Refinancing Your Home Loan?If you want to save money on your home loan, you may want to consider refinancing. During the refinancing process, you will replace your existing home loan with a new one; however, you want to secure the lowest interest rate possible. How can you get a better rate on your mortgage during the refinancing process? 

Consider Refinancing Your Home Loan To A Shorter Term

If you can create less risk for the lender, you can get a lower interest rate. One of the ways to do so is to refinance your home loan to a shorter term. If the average interest rate has gone down, you might be able to keep your monthly payments the same while paying off your home loan more quickly. If you can refinance to a shorter loan term, your lender might reward you with a lower interest rate. 

Consider Paying Off Your Existing Debt

You can also secure a better interest rate on your home loan by paying off your existing debt. This includes student loans, car loans, and credit card debt. You might want to use the proceeds from a cash-out refinance to pay off your existing debt. The lender might give you a lower interest rate if you have a better debt-to-income ratio. 

Always Check Your Credit Report Before Refinancing

Your credit score will also play a significant role in your interest rate. Before you refinance, you should request a free copy of your credit report. There might be inaccuracies in the report that you need to correct before you apply for a refinance. Furthermore, if your credit score has gone up since you purchased the home, you might be able to secure a lower interest rate from the lender. 

Secure A Better Mortgage Rate When Refinancing

One of the many benefits of refinancing an existing home loan is that you may be able to secure a lower interest rate. You want to get the lowest interest rate possible, so consider working with a professional who can help you put these tips will work for you. Getting a lower interest rate on your home loan could save you tens of thousands of dollars over the life of the loan. 

 

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What To Know About Property Values and Refinancing

November 12, 2021 by

What To Know About Property Values and RefinancingThere are many people who are thinking about refinancing their homes. For example, some people may be interested in reducing their monthly payments, while other people may be interested in tapping into the value of the home to fund a home improvement project. What is the relationship between property values and refinancing? There are several important points to keep in mind. 

Property Values Tend To Rise

First, it is important for homeowners to understand that property values tend to rise during the life of a mortgage. For example, someone may purchase a home valued at $250,000. Then, fifteen years later, the home might be valued at $350,000. This might mean that homeowners have access to an extra $100,000 in equity. They might use some of this money to put towards a new home when they sell their current home. Or, they might refinance their home and access that equity to complete a home improvement project. 

Monthly Payments Might Go Up

If homeowners decide to refinance their houses and take all of the equity out of the home, they might be starting their 30-year mortgage over again. Then, because the property is worth more money, they may end up with a higher monthly payment. That is why homeowners need to work with a professional who can help them figure out how the refinancing process may impact their finances in the future.

Why Property Values May Rise

There are several reasons why property values may go up. First, there might not be enough homes in the local area. Therefore, the ones that are available might be worth more money. The popularity of a specific location might increase as well. There might be a new company moving to the area with attractive job opportunities. Finally, home improvements might also increase the value of the property. 

Why Refinancing Might Make Sense

There are several reasons why it might be a good idea to refinance a home. First, homeowners might use some of the equity to pay off existing debt, such as medical bills. Some homeowners like to refinance their homes to reduce their monthly payments with a lower interest rate. Finally, there are homeowners who refinance to complete home renovation projects. 

 

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Deciding Whether To Move or Refinance: Which Is The Better Option?

June 16, 2021 by

Deciding Whether To Move or Refinance: Which Is The Better Option?There are a lot of people who are wondering if now is the right time to move or refinance their current home loan. With interest rates still favorable, a lot of homeowners have the potential to save a lot of money if they are able to secure a home loan with a lower interest rate. There are two ways homeowners can secure a home loan with a lower interest rate. The first is to refinance. The second is to move. Which option is better? There are a few key points to keep in mind.

Taking A Closer Look At Refinancing

There are a lot of homeowners who have an abundance of equity currently built up in their homes, making this a great time to refinance. With a refinance, there are multiple options available. Some homeowners might refinance to access the equity in their homes, allowing them to complete a project. Some homeowners might refinance in an effort to pay off their home loan sooner. If homeowners are trying to access more equity, or are trying to shorten the term of the loan, then refinancing might be the smart move.

Looking At The Option Of Moving

The other option is to get a new home loan entirely by moving. This is an attractive option for homeowners who might have a dream house they would like to move to. In particular, any homeowner who currently has a home loan with a high interest rate should consider moving into their dream home now. Because mortgage rates are low right now, this is a chance for homeowners to move into a larger house while keeping their mortgage payments the same or less by obtaining a lower interest rate.

Every Situation Is Different

In the end, every situation is different. Because interest rates right now are so low, now could be the time for homeowners to consider moving or refinancing. Switching to a home loan with a lower interest rate could save tens of thousands of dollars over the life of the loan. Anyone with questions or concerns should reach out to a professional for help.

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Is Now The Time To Refinance Your Mortgage?

May 27, 2021 by

Why Refinance

To refinance a mortgage means to pay off your existing loan and replace it with a new one.

There are many reasons why homeowners opt to refinance, from obtaining a lower interest rate, to shortening the term of the loan, to switching mortgage loan types, to tapping into home equity.

Each has its considerations.

Lower Your Mortgage Rate
Among the best reasons to refinance is to get access to lower mortgage rates. There is no “rule of thumb” that says how far rates should drop for a refinance to be sensible. Compare your closing costs to your monthly savings, and determine whether the math makes sense for your situation.

Shorten Your Loan Term
Refinancing your 30-year fixed rate mortgage to a 20-year fixed rate or a 15-year fixed rate is a sensible way to reduce your long-term mortgage costs, and to own your home sooner. As a bonus, with mortgage rates currently near all-time lows, an increase to your monthly payment from a shorter loan term may be negligible.

Convert ARM To Fixed Rate Mortgage
Homeowners with adjustable-rate mortgages may want the comfort of a fixed-rate payment. Mortgage rates for fixed-rate mortgages are often higher than for comparable ARMs so be prepared to pay more to your lender each month.

Access Equity For Projects, Debts, Or Other Reasons
Called a “cash out” refinance, homeowners can sometimes use home equity to retire debts, pay for renovations, or use for other purposes including education costs and retirement. Lenders place restrictions on loans of this type.

A refinanced home loan can help you reach specific financial goals or just put extra cash in your pocket each month — just make sure that there’s a clear benefit to you. Paying large closing costs for small monthly savings or negligible long-term benefit should be avoided.

Many lenders offer low or no closing costs options for refinancing. Be sure to ask about it.

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Looking at Home Mortgage Refinancing in 2021

April 8, 2021 by

Looking at Home Mortgage Refinancing in 2021In 2019 many people expected that the home lending market was going to eventually grow more expensive. Instead, 2020 spent its entire 12 months becoming more affordable when it came to financing a personal home, moving in the opposite direction of what was expected. Not only did the loan cost drop break previous records, but it also presented an additional opportunity for homeowners to reposition and take advantage of lower borrowing costs again.

The General Advantages of a Home Loan Refinance

The refinancing of a mortgage has traditionally been three-fold. First, it is a chance to re-negotiate the loan on a home purchase for a lower interest rate, which means more of the borrower’s payment goes to the loan and less to an interest charge. Second, it gives people an option to change the interest rate charged to a shorter payment period, which can also save considerable money. A borrower will pay dozens of thousands less on a 15-year loan versus a 30-year mortgage. Finally, refinancing allows a borrower to tap into home equity to use that cash value to consolidate debt, pay for other big costs, or make renovations to the home without paying out of pocket for them.

Why 2021 Provides a Good Window

By the time 2020 ended, mortgage rates overall were running at all time lows on a conventional 30-year fixed mortgage, an amazing opportunity for the cost of borrowing and probably the lowest possible in 50 years. The dip won’t last forever, as many people have been trying to project, and eventually what goes down also goes back up. Some amount of rising rates is a firm prediction from the National Association of Realtors® for 2021 which has already occurred, and that loan interest rate cost is expected to eventually go somewhat higher by the end of the year if the economy speeds up again. So, the 2021 window for a valuable refinancing opportunity is clearly the beginning half of the year.

Comparing Current Status to “What If”

Obviously, just chasing a mortgage refinance for minimal gain is silly. The amount paid in closing costs can be expensive. However, when the shift can easily be a percentage point difference or more, then it is worth considering. Many people locked in homes at higher rates in the past and are still paying that amount, especially on an adjustable-rate mortgage. Grabbing a fixed mortgage refinance in the current rate environment is definitely worth the work and time, potentially paying for itself in a handful of years or by consolidating higher cost debt into the home loan.

There is no perfect formula that applies to everyone, but 2021 has already shaped up to be the year that the majority of homeowners can definitely benefit from, especially given the need for financial reserves and a bit of personal finance reorganization after 2020.  As always, consult with your professional mortgage advisor for details on your personal situation.

 

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The Top Tricks For Updating A Home On A Tight Budget

February 11, 2021 by

The Top Tricks For Updating A Home On A Tight BudgetThere are a lot of people who are looking for ways to get the most money out of their property when they put it on the market. One of the tricks to doing this is to update the home before it goes on the market. Unfortunately, this can also be expensive.

Even though it is true that many homeowners will be able to recoup the price of the renovations when they list the home on the market, we still need to pay for these updates out-of-pocket. This can be incredibly expensive and could take money from other important areas, such as a car or someone’s education. Fortunately, there is a way for people to update their home without spending any money out of pocket. 

Refinance The Home And Free Up Some Cash

The first option the people need to consider is the opportunity to refinance the home while also freeing up some cash. Those who have been in their home for several years might have some equity built up in the home. They may be able to refinance their home, reducing their monthly payment while also getting a little bit of cash they can use to complete the renovation without paying anything out of pocket. Those who are interested in this option should speak with their lender about some of the ways they might be able to finance their renovation project.

Set Up A Payment Plan With The Contractor

Another option that homeowners might want to consider a set up a payment plan with the contractor. A lot of contractors are willing to provide homeowners with very low interest rates, or 0 percent interest rates, on the home renovation project. Most contractors understand that a lot of families are operating on a budget and might not have money to pay for the project in its entirety up front. This is another topic that homeowners should discuss.

Finance A Home Improvement Project On A Budget

These are just a few of the many ways that homeowners can finance a home renovation project without spending an exorbitant amount of money out-of-pocket. Think about these options ahead of time and make that next home improvement project more affordable.

 

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4 Steps to a Smooth Mortgage Refinance at a Rock-Bottom Rate

January 20, 2021 by

4 Steps to a Smooth Mortgage Refinance at a Rock-Bottom RateRight now is the best time to look at refinancing your home. Even if your current mortgage is as young as a year old, you might find that a refinance is in your best interest.

Be Sure That A Refinance Makes Sense

With today’s rates, refinancing makes sense for many homeowners, but it might not be the right move for you. Depending upon your mortgage, you may pay a penalty if you prepay early. Also, if you’ve paid heavily into your mortgage, refinancing into a new 20 or 30 year mortgage could cost you money over the long-term. The bottom line is to carefully read through your loan documents or even call your loan company to find out the details of the impact of a refinance.

Consult With A Professional

Once you’ve determined that a refinance makes sense in theory, it’s time to talk with an objective professional, i.e., not your loan rep. Seek out a fiduciary, who has receives no gain whether or not you refinance. Have the professional run the numbers so you can see in black and white where you will stand financially after a refinance.

Compare Rates

If you and your financial professional decide that a refinance is the way to go, now it’s time to compare rates. Even with rates at rock bottom prices right now, you’ll find that you might save even more money just by shopping around. Also, remember that if your credit is excellent, you have more negotiating power. If you have a preference with working with a certain company, ask them to match the interest rate you’ve been offered by a competitor. 

Protect Your Investment

Now that you’ve improved your mortgage situation with a refinance, it’s time to consider what your heirs will be left with when you’re no longer here to provide for them. Make sure that your loved ones can reap the benefit of your savvy financial planning by taking out a life insurance policy. There are many variations on life insurance policies, so by sure to compare and contrast benefits, terms and rates.

As a homeowner, you should always be on the lookout for ways to maximize your investment. Use these refinancing tips to get the most out of your home’s value.

 

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How To Finance Your Home Improvement Project

December 22, 2020 by

How To Finance Your Home Improvement ProjectIf you have been spending a lot of time at home recently, then you might be getting tired of staring at the same four walls. Fortunately, there are plenty of ways for you to switch it up by financing a home improvement project. At the same time, home improvement projects can be expensive, particularly if you are targeting the kitchen. Therefore, you might be wondering how you are going to be able to pay for them. There are plenty of ways that you can finance a home improvement project, so take a look at a few of the options below. 

Consider Taking A Cash-Out Refinance

One way that you can free up some extra cash is to carry out something called a cash-out refinance. Right now, due to the coronavirus pandemic, mortgage rates are at historic lows. Therefore, you might be able to complete a refinancing plan that can free up some cash for the home improvement project. When you refinance your loan, you essentially change the terms of your mortgage to free up some of the equity that you already have in your home. Then, you can put this equity toward your home improvement projects. 

Take Out A Home Equity Line Of Credit

You might also be able to tap into the equity you have in your home directly by creating a line of credit. This is a common option when it comes to home improvement financing. The money that you receive from this home equity line comes directly from the equity in your home. If you have been paying into your mortgage for several years, then there is a high chance that you have built up an equity line of credit. At the same time, remember that this is very much like a second mortgage, so you are essentially putting up your house as collateral.

Finance Your Home Improvement Project

Even though you can always put your home improvement project on a credit card or take out a personal loan, it might be better for you to tap into the equity in your home. By accessing a lower interest rate, you might be able to save a significant amount of money while still accomplishing your home improvement project goals.

 

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Getting A Lower Interest Rate During A Refinance

December 16, 2020 by

Getting A Lower Interest Rate During A RefinanceThere are a lot of people who have spotted the record-low mortgage rates right now and are wondering if they can refinance successfully. While many people apply for a refinance of their current home loan, not everyone will be approved. Furthermore, a home refinance is not the best option for everyone. Those who want to qualify for record-low refinance rates need to keep a few key points in mind.

Be A Strong Refinance Candidate

First, homeowners need to make sure that it is actually worth their time to refinance to a lower home mortgage rate. In general, homeowners want to make sure they are able to save at least three-quarters of a percentage point when compared to their current home loan to make a refinance worth their while. If they cannot save this much money on their home loan, then they may end up spending more money on the refinance in closing costs.

Act Quickly

The real estate market is volatile right now. Therefore, home refinance rates are often moving targets. As a result, the interest rates that are published this week could change in the span of a few days. By the time loan packages are returned to the lender, the rates might not even be accurate anymore. Therefore, all homeowners need to be willing to act fast. Have pay stubs, bank statements, and tax returns ready to go when the lender asks for it.

Have The Money For Closing Costs

One of the most common reasons why homeowners lose out on the best interest rates is that they do not have the money ready to pay closing costs. By the time the homeowners get the money together, the refinance rate might have passed them by. Usually, closing costs fall somewhere between two percent and five percent of the total loan amount and this amount is usually due at signing.

Qualify For The Best Mortgage Rates During A Refinance

With mortgage rates falling to record lows, now is a good time for many homeowners to refinance. On the other hand, homeowners need to set themselves up to qualify for the lowest mortgage rates. Following these steps can place homeowners in a position to be successful when they apply for a refinance.

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Should You Get A Second Mortgage To Pay For College?

December 5, 2019 by

Should You Get A Second Mortgage To Pay For CollegeCollege is expensive and everyone needs to think about how they are going to cover the costs. Some of the costs include tuition, room and board, meals, books, and spending money.

In order to pay for college, some people consider taking out a second mortgage instead of taking out a student loan. How can someone know if taking out a second mortgage is the answer for them? There are several factors to consider.

The Interest Rate

One of the factors that people need to consider is the interest rate on the second mortgage. The higher the interest rate, the more expensive the second mortgage is going to be.

The total cost of the second mortgage, including the interest rate, points, origination fees, and other expenses, must be weighed against the cost of attending college, which often comes in the form of a student loan. Which is going to be more cost-effective? The second mortgage or the student loan?

The Size Of The Loan

Another factor to consider is the size of the loan. Ultimately, the size of the loan is going to impact the final cost of attending college. The larger the loan, the more someone will have to pay in terms of interest. The size of the student loan should be compared to the cost associated with a second mortgage. 

The Tax Implications

Another aspect people need to consider is the tax implications. The interest on a first mortgage is tax-deductible. This is often the largest tax deduction that someone claims. People might assume that the interest on their second mortgage is going to be tax-deductible as well.

Unfortunately, this isn’t always the case. Interest on a second mortgage is tax-deductible only if the proceeds from that mortgage are going to be used to pay for the property. If they are being used to pay for education, they are not tax-deductible.

People need to compare the tax implications of a student loan versus the implications of a second mortgage.

Using A Second Mortgage To Pay For College

These are a few of the factors that everyone needs to think about when trying to finance the cost of higher education. These decisions can have significant impacts on someone’s financial future.

Consult with your trusted home financing professional for a review of your personal situation. They can guide you through the process to make the best decision for your family.

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