House Refinance

There is a popular narrative being floated in the financial world that if you refinance your mortgage, you are digging a deeper hole!  That starting all over again, you are in fact going backward.  However, is this really the case?

There are many factors to consider in a refinance of a mortgage.  Let’s consider a few questions:

  • Have you been making payments on a current credit card or credit cards only to see the balance stay the same or increase?
  • Have you recently or within the last 18 months did balance transfers from multiple credit cards to one?
  • Do you have a home equity line of credit or a home equity installment loan?
  • Do you have more than 2 years remaining on student loans?
  • Do you have multiple no payments finance deals getting ready to expire in 12 months?
  • Do you expect to move in the next 16 months?
  • Is this your “forever” home?

Now, did you answer yes to 3 of any of the above questions?  If so, then let’s talk about a refinance.  Before we do, let’s talk about the appreciation of your home.  Most homes in the United States appreciate in value year over year.  In fact, the nationwide average is 3% to 5% yearly.  This is a conservative estimate, especially in today’s real estate market.

If you have been in your home for 2 years now, let’s consider a scenario:

The value of your home in August 2018 was $300,000.

The value of your home (as an estimate) in August 2020 is approximately $330,750.

You have built equity and that has nothing to do with your mortgage.  In essence, you are $30,000 to the plus!  You won’t be going backward.

Now let’s consider debt:

$15,000 in credit card debt: average monthly payment is approximately $450.00 per month.

$45,000 in student loan debt: the average monthly payment is $460.00

$275,000 mortgage payment for principal and interest and is approximately $1196.00 monthly.

Just these three items come to $2100.00.  Plus, $910.00 per month may not be tax deductible.  However, for this post, let’s not complicate that calculation.

If you refinanced right now at today’s current rate, assuming good credit: $1383.00  Your savings in real money is almost $850.00 a month!  $850.00 a month. This is over $10,000 a year in real cash in your pocket.

Let us be clear, this is not an offer for a mortgage.  The calculations above are for illustration purposes only.  A mortgage professional will assist in helping you understand rates, terms, credit scenarios, and appraisals.  However, with that being said: are you starting over?

Imagine what your finances would like with an additional infusion of cash at a level of $600, $800 or $1000 dollars monthly!  It would be significant and would have an impact. You are not starting over.  In fact, in doing a refinance the proper way, you will be light years ahead in debt, savings, and the elimination of massive interest charges.  It’s time to meet with a mortgage pro!

Mortgages photo

Making smart financial decisions at times requires you to work from the finish to start.  To do everything backward to ensure you are getting exactly what you want.  So as a smart mortgage customer, please finish this sentence:

“I want my mortgage payment to be ___________.”

Sounds simple enough.  This is something that the automotive industry has been using for decades.  However, theirs is for all the wrong reasons.  In the mortgage industry, this happens on the front end of transactions (purchase) often leading to the wrong product, term, and even the wrong home.

However, as a current homeowner, it’s now time to pick your plan it’s time to pick your mortgage payment.  Do you have the ability to do that? Of course you do.  Banks, lenders, brokers should not be picking this for you.  They don’t have the full scope of your financial situation, you do.  Or at the very least you will.

“I want my mortgage payment to be ___________.”

Now it is time to work backward:

  • By having this mortgage payment_______ and paying off _______ I can save towards _______ and fund _______ I accomplished _________________.
  • By having this mortgage payment and paying off _____ I can save towards ________ and fund_______.
  • By having this mortgage payment and paying off_____ I can save towards __________.
  • By having this mortgage payment I will payoff ____________.
  • I want my mortgage payment to be ____________________.

The goals can be many.  From retirement to debt-free living to ensure your children have no student loans.  All of these goals and many more can be accomplished by asking one single question and starting backward (at the goal) and come back to the sentence you just completed.

“I want my mortgage payment to be ___________.”

There are many tools that will help you get there!  To get there, it is breaking things down to the smallest detail.  Down to the number of bags of Doritos you buy on a monthly basis.  Goals financial or otherwise have to be broken down to the smallest detail to fully be reached.  Then, you commit to that goal.

There is an old saying, “the devil is in the details.”  Let get into that detail here <CLICK HERE FOR YOUR FINANCIAL ROADMAP>

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