Future Plans

Without question, the last 2 to 3 months have reminded us that we need to expect the unexpected.  Whether it’s that you need to ensure cash reserves in the face of income loss, save for college, retirement protection, investments, or if you have plans of being an entrepreneur, we have tools at our disposal.

For the majority of Americans, our wealth is tied directly to our home. Bear in mind that as we’ve made our monthly payments, we got a return on our investment in the form of equity!  Depending on your circumstances, that equity is there for you to use in the form of cash-out refinance. You can use a cash-out refinance as a financial tool. Right now, your plan should be to build up your emergency fund and/or max contribution to a retirement plan.  Or replenishing lost retirement savings. Investing in a college savings fund.  Or for those that want to take it a step further, investing in the stock market or becoming a real estate investor. Let’s take a closer look at how you can use a cash-out refinance.

Expect The Unexpected

Financial wellness. We think of wellness often in nutrition, foods, and our bodies.  However, financial wellness is equally as important.  When you plan for the unexpected, you can deal with even the most stressful of events, with solid financial backing.

Remember the equity?  Yes, you can use this equity to ensure you are able to meet unexpected moments.  Now that the Fed has lowered short-term interest rates, what does this mean for you? Mortgage interest rates are lower.  Now that interest rates are lower you can accomplish two goals.  First, with a cash-out refinance, refinance your current mortgage to a lower rate and payment, cashflow!  Second, use that equity (cash-out) to put a plan and budget in place.

Emergency Fund

Regardless of your current circumstances, you must strategize to ensure you have a savings plan.  There is an old saying “too much month and not enough paycheck!” So how in the world do you save for an emergency?  Step one, we spoke about above.  Step two, debt consolidation.  Consider this scenario for a moment: If you have credit cards and student loans that cost you $800 per month in minimum or slightly above minimum payments.  You take those bills, use a cash-out refinance, and cut that in half or more?  Guess what, now you are saving about $400 per month for an emergency fund! 

Smart money experts recommend having at least 3 – 6 months of necessary living expenses available.  Cash, not credit cards.  Why?  Simple: as one example, in the event of another emergency, you can’t pay your mortgage with a credit card.  There is a reason they say “cash is king.”  While utilizing two methods staying at a maximum 30% level on credit card usage per month while also putting money away, you are emergency ready!

Building Retirement Funds

FACT and there is no other way to put it: tax-free money is the best money.  In fact, if you are a part of a company that has an employer 401k matching program, then tax-free and free money is the best money!  The trick is, you have to be contributing yourself.

As of 2019, the IRS allows you to contribute up to $19,000 per year to your 401(k). If you’re over 50, you’re allowed to contribute anywhere between $1,000 – $6,000 per year if your plan allows for catch-up contributions. The exact limit for these contributions is based on the type of retirement plan you have. 

Are you familiar with the “Rule of 72?”  It is called the Theory of Compounding Interest.  In essence, whatever number you divide into the number 72, is the number of years it will take for your money to double.  12% into 72 means your money doubles every 6 years.  Whatever number, as this is for hypothetical purposes.  In short, retirement in your 401k or IRA allows your money and interest to compound tax-free.  When is the best time to start?  Ask a financial advisor, but the answer is right now.

If you’re behind in building retirement funds, taking cash out of your home is a perfect way to ensure you can retire and retire on time! However, do not rely on a cash-out refinance alone.  A solid plan, by incorporating elements of the above is critical.

College Fund

We have dealt with 1000’s and 1000’s of people. There has not been a single person yet that has said; “Yes, I want my kids to be crushed with student loans.”  No parent wants that for their children.  It is also not something you can save for in just one year.

The cost of college tuition will not go down. In fact, it is one of the fastest rising costs in the US.  With that, you need to be ahead of the curve.  A cash-out refinance is a perfect solution to begin or fully fund a college education. 

These are just a few examples of what a cash-out refinance can do for you and your family.  How much equity do you have?  What is the right mortgage for you?  Will you qualify? Is the time right? Cash-out refinance is a powerful financial tool.  One that many people overlook.  You may have more equity and resources available to you than you even know.  Review this page, see what scenarios you connect with and what makes sense for you.

Most mortgages have terms of 15 or 30 years, but some spread payments across 40 years. These longer-term mortgages make it easier to borrow larger sums than you might otherwise be eligible to borrow, but these loans also have a few disadvantages. Consider the pros and cons of a 40-year mortgage carefully before making this serious long-term commitment.

Traditionally, taking out a new mortgage or trying to refinance (“refi”) an existing loan involved a trip to the bank. Fortunately, the rise of online mortgage lenders has made the process much simpler. There are now more products available, and more opportunities to find products you qualify for. Here are the top three ways using online lenders makes it easier to refinance your mortgage.

The last thing homeowners want is to spend more on their homes. When researching cash-out refinance rates, it’s important to determine whether the refi will actually cost more than other kinds of refinancing. There are many factors to consider when answering this question. Here are some things to keep in mind:

Refinancing may seem at first like a daunting process, but it doesn’t have to be if you approach it in an organized and methodical manner. Before you start sifting through mountains of paperwork and trying to compare mortgages, consider these top four things to do when you’re ready to refinance.

When you’re facing escalating debt, you may feel like you’re all alone. The truth is, it’s a common problem faced by many American households. Credit card debt surged in 2019, with total US credit card balances standing at $870 billion, as reported by American Banker. If you’re struggling to make your repayments, it’s time to refinance credit cards and consolidate debt.

A conventional loan — also known as a conventional mortgage — is a type of home buyer’s loan that is not backed by the government, and instead comes from a private lender. If you’re new to loans and mortgages, here’s a primer that goes over the basics.

With interest rates at near-historic lows, many homeowners are starting to look at the different refinance rates to see if they are able to save money. If you can save money on interest, you will be paying less each month. Plus, if you have other debt, you can consider a cash-out refi that will alleviate other high-interest debt. This will save you even more. Wondering how to get the best refi rates?

As you make payments on your house, you build equity, and you can tap into that equity and turn it into cash with a cash-out refinance. This basically means you refinance your mortgage for more than you currently owe and receive the difference between value and what you owe in cash. You can use the money any way you want, but some uses are obviously better than others. Evaluate the pros and cons of a cash-out refinance to see if it’s a good option for you.

With 30-year fixed mortgage rates falling to some of the lowest rates in recent memory, this is one of the best times for homeowners to consider a refinance to complete home projects or pay off high-interest debt like medical bills and credit cards. Of course, the process isn’t free, so let’s take a look at the costs associated with a refi: