When is a Good Time to Re-Mortgage?

When is a good time to Remortgage?

You have built up some equity and you would like to eliminate your mortgage insurance

It can be deceiving to think you’re in a good position based solely on your interest rate. FHA loans, for example, often come with lower rates. However, the mortgage insurance stays on for the life of the loan. By combining the rate and the mortgage insurance together let me show you how much you are spending. For example, if you owe $250,000.00 on your home, with an interest rate at 3.75%, paying $170 per month in mortgage insurance, you are at a combined rate of 5.125%. It works the same with a conventional loan, however mortgage insurance will automatically drop off the loan at 78% loan to value- this is based on wherever the value was at when you purchased your home.

Right now, so many people have equity, more equity than they have ever had in their home. Even if you’ve been in the home for a year, it is possible that eliminating mortgage insurance is a possibility!

Debt Consolidation

Many of us have personal loans, installments, credit card debts, second mortgages etc. and the interest on these debts can be difficult to maintain! If you have equity, you can pay off all of these debts and save a lot more on a monthly basis allowing you to simply live better, pay your home off faster, invest, the sky is the limit. For example, say you have a credit card balance of $10,000 and a payment of $359/month, a personal loan of $18,000.00 and a payment of $670/month, and second mortgage of $30,000 for a payment of $568/month. This all adds up to $1,597 per month of liabilities. Say you owe $300,000.00 on your mortgage and a current payment of $1,432.00/month at a 4% rate. Rolling these debts into the loan would make your new loan amount $358,000.00, at the same rate of 4%, your new payment would be $1,709.00. Your liabilities AKA debts being $1,597 per month and previous mortgage payment together equals $3,029.25. This would save you $1,320.25 per month!

Many people are scared to do this because they don’t want to start over on the loan or add to the balance, but if you take into consideration how high the interest rate is on these other debts and how little it would affect your mortgage you can see the savings are just an opportunity to invest or even shorten your term. There is so much you can do with an extra $1,320 a month!

Changing the term of your mortgage

Changing the term of your mortgage is extremely easy! Say you are nearing retirement and your goal is to be debt free in 12 years. We have terms all the way from 30 year fixed to an 8 year fixed loan. Other times you might want to change the term is if you are trying to free up monthly expenditures and you want to go from a 15-year term back to a 30 year. Retirement is something we should always be thinking about. When Americans retire, 83% of their cash is tied up in the equity of their home and only 17% of their retirement funds are from investing. It’s a crazy way to think about it!

Refinancing out of a bad mortgage

Refinancing out of a bad mortgage could include paying off a balloon, interest only loan, loan modification with bad terms, a 40-year mortgage, eliminating a lien due to forbearance, paying off a home equity loan with a high interest only payment, or going from an ARM to a FIXED mortgage. There are so many examples of this! Another great one is if you are on a land contract and need to get a home put back into your name. The best way to get out of this is to simply reach out to a broker with a good reputation (ME 😉) or someone that will be able to really dive deep with you to get you out of what I like to call a “mess” and back on track with a healthy mortgage that is establishing equity and working on your side.

Refinancing to clarify ownership

Refinancing to clarify ownership is just as it sounds. If you need  to remove or add anyone to the deed of your home. Divorces, separations, joint borrowers parting ways all typically involve removing someone from the mortgage. This could also be due to an inheritance or death in a family where other people need to be bought out in order to consolidate the ownership. We see this a lot, especially with divorce.

There are so many reasons to reach out for a free mortgage refresh. Let us show you how we plan your debt to maximize your return on investment.