Refinance

5 Bad Reasons to Refinance Your Mortgage

Written by adminOctober 9, 2019

Mortgage rates have been at their lowest rates in recent years, it might be time to refinance your home.

If you would like to lower your mortgage costs or tap some of the equity you built up over the years, there are many good reasons to consider starting the refinance process.

It is not always the right move however, here are 5 reasons why refinancing your mortgage could be a terrible idea.

1. Incorrectly Focusing on the Immediate Savings

If the new home loan doesn’t really save you money, then refinancing to score that lower interest rate and monthly mortgage payment may not be the smartest choice.

If you are thinking about moving soon, a refinance could save you perhaps $100 a month. But if you have to pay closing costs of $2000, you will need to stay in the home for 20 months or more if you want to avoid losing those savings.

Another thing is if you’ve been paying into your mortgage for 10 years and then refinance into a new loan, you could get stuck with 10 extra years of interest charges.

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2. Seeking Relief from Credit Card Debt

If you are looking to wipe out your credit card balances, you will need to begin a cash-out refinance. What happens is you borrow more than you owe on your home and take out the extra in cash. This cash then goes to the card issuer.

You will be left with a larger mortgage and a larger monthly payment. You would also have to toe the line to make sure you don’t end up drowning in credit card debt, putting your house at risk.

3. You’re Eager to Renovate

A cash-out refinance can free up the equity you need to pay for the remodeling project of your dreams, like getting those granite counter tops you’ve always wanted for your kitchen or redoing the tiles in your bathroom.

Before you borrow the money for home improvement, make sure to avoid projects that do not add value to your home.

That would simply result in you taking on more debt. Ensure that you will make a good return on your investment before moving forward with the remodeling.

4. Playing the Stock Market

The best way to build long-term wealth is probably by investing in stocks, bonds and other assets. it is very risky however to invest with equity based on your home in a cash-out refinance.

It is hardly worth it to refinance your mortgage to earn modest savings on investments as safe as certificates of deposit. Riskier investments carry considerably higher risks, nobody wants to lose their money and be left with a higher mortgage.

If you refinance solely for the purpose of investing, it pays to be extra cautious. Consider automated investing services that will automatically adjust your portfolio to withstand market fluctuations.

5. You want a “No-cost” Refi

There’s no such thing as a free lunch when it comes to mortgages. Every mortgage comes with fees and other costs that will have to be paid. When a lender claims to offer a “no-cost” refinance, you would be wise to be skeptical.

These loans conceal the closing costs, and may be rolled into your loan amount or passed into you in the form of a higher interest rate.

These 5 reasons to hold off refinancing your mortgage can save you a lot of money. For any other financial advice, give us a call we are ready to assist you.

Call Now 844-332-2079

Written by adminJanuary 12, 2018

The American dream. Financial freedom. Being able to do whatever we want, whenever we want. That’s the life so many people chase after, but often don’t know how to achieve.

We often get into the grind, thinking we’re making the right choices. The sad truth is, we’re running around and around in a giant hamster wheel, working our tails off to keep it moving, but going nowhere at all.

If you can have enough money in your bank account that you never have to worry about living month-to-month or paycheck-to-paycheck, that IS freedom.

So, how do you take your life to the next level?

Step #1: Look at your earnings and make bold calls if you need a change.

The difference between where you are now in life verses when you first got out of college or graduated high school is you’re a bit more experienced in life. Whatever you’re currently doing, you’ve most likely been working on it for nearly a decade.

You’ve learned, studied, grown, made mistakes, gave up, went after again, and so on. If you take all of this into account, what stage would you say you’re at?

And most importantly, where do you see yourself in another 10 years? On your way to becoming a millionaire? Then great! Don’t change a single thing. Keep plugging away doing exactly what you’re doing.

But be perfectly honest with yourself. Do you need to make a change? Maybe you’re in over your head? You might need to make a slight or a drastic change to stay ahead. As they say, “Insanity is doing the same thing and expecting different results”.

Step #2: Make sure you focus on your top client.

Here’s the thing, you need to remember one person. And that person is yourself. We often forget about our own well-being and seek to please others first. If you work at an office while attempting to start your own business, will working those extra hours really net you anything?

This might sound selfish, but you have to ask what’s in it for you. What will you get out of it?

As long as you’re working for your boss, you’re helping them fulfill their own dreams and reality. They get to go on longer breaks and vacations while you plug away extra hours to make them more money.

And it’s a waste of your time! Instead, make sure you’re getting something out of it. If you’re not, consider it time wasted away from what you should be doing: setting up your business!

Step #3: Other Money

This might seem counterintuitive, but If you need some money, borrow it. Don’t be afraid of borrowing money and using that to get things going. It’s used most commonly perhaps in real estate, where someone takes out a mortgage, buys and fixes up a house, and then uses rent payments he collects on the interest.

As with anytime you borrow, it does come with risks. There can be a downturn in the economy, but I’m willing to bet that most successful businesses started out with an idea, drive, and a loan.

They often say that you need money to make money, so you can try borrowing if it’s worth the risk. It may be the only way you get to take that step.

Written by adminJanuary 4, 2017

Mortgage , Refinance

The decision to refinance can end up costing you thousands in closing costs and other fees. If you time the rate and term refinance process right, however, you can actually end up improving your financial situation, despite these costs. When you refinance your home loan, your lender generates a brand new agreement, which pays off the balance of your current loan. The new mortgage agreement comes with updated terms, interest rates and payoff dates. Tactical use of rate and term refinancing allows you to improve your potential return on investment without depleting your resources. Here are three beneficial times to choose this refinance option.

Upon Reaching 78% Loan To Value Ratio

If you purchased your home without putting 20% down, your monthly mortgage payment includes private mortgage insurance, or PMI, which can add thousands to the final cost of your home. The PMI funds do not apply to your principal balance or interest costs; it just protects the lender in case of loan default. You are only responsible for paying PMI until your principal balance hits 78%.

You can speed up the PMI removal by refinancing your home loan once you have built up some equity. You can work with a professional to secure an appraisal and determine if your home’s current value has grown enough to eliminate PMI and secure you improved payment rates. If not, you may want to wait until your PMI payments drop off after the 78% mark. For government backed loans, however, you have no choice but to refinance with a different lender to eliminate PMI costs.

At The End Of Your Adjustable Rate Mortgage Term

An adjustable rate loan allows you to make reduced payments at first in anticipation of financial growth in the future. Upon reaching the end of the initial term limits, your monthly mortgage payment could jump hundreds of dollars. If your financial situation has not improved enough by that time, you could struggle to keep your loan payments current, especially when faced with property maintenance and repair costs.

If you refinance at the end of your adjustable rate mortgage term, you could obtain a fixed rate loan with financially viable payment amounts. With the fixed rate option, your payment terms remain static, which eliminates the risk of high recalculation amounts.

After Significant Credit And Income Improvements

If made great strides in your career advancement efforts, you may have experienced income and credit improvements since you first obtained your home loan. These improvements can help you secure better loan terms through a full refinance of your loan. You may qualify for reduced interest rates that drop your payoff amount significantly. As your total loan balance decreases, so do your monthly payments. As a result, you can start paying additional funds toward your principal balance to pay off your home loan even faster.

Choosing Between The Home Loan Refinance Options

Although rate and term refinancing can help improve your financial situation, the returns can take a long time to add up. You can predict the turnaround time by calculating your monthly and total savings, and then comparing them to the costs of the refinance. If you find yourself in a dire need for money right now, you can elect to apply for a cash out refinance instead. With the cash out refinance, you can use the funds to repair or renovate your home, pay down debt or finance other expenses. To determine the best refinance option for your situation, obtain an online quote and compare the results with your expectations. The quote will help you determine if you will benefit financially from the rate and term or cash out refinance options.

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