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© 2019 by Justin Purpero | Articles

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  • Justin Purpero

Refinancing Your Home Might Be A Great Idea, Even If You Don't Think You Should.



Did you know that refinancing your home might be a great idea even if you don't think you should? Today, I'm going to talk to you about different ideas about why refinancing might be the right move when it's the wrong move and just some tips and tricks that you should learn so that you can make sure you have the best mortgage on your home. So one of the benefits of home ownership is the opportunity to be able to refinance your mortgage. Now refinancing is something that a lot of people don't understand when they don't own a home. And so what refinancing means is that you're able to take the existing mortgage that's on the property and change the terms on it. Whether you change it to go to a different bank or a different program. You might go from a 30-year fixed mortgage to a more suitable loan that maybe would pay off in 15 years. The opportunity to refinance is always there. You do not have to get permission to change your mortgages from one bank to the next. And quite frankly, as time progresses, it really opens up lots of opportunities to leverage your home ownership by taking advantage of the best rates on the market or the best program that suits you and your family. And I find that a lot of customers, they think that they get a home, they buy it, they get the rate, and then they're done with the property and they move onto the next one. But what I have found in my 20 years is that a lot of people don't understand the benefits of refinancing. Some of the things that come along with refinancing that would help them create more wealth in their life and may need to be considered. A lot of times people just think, "I've got a great low interest rate". And for the market, it might be a great interest rate. Right now, we're looking at 30-year fixed rates. Let's call it four and a quarter percent. Two years ago, we were offering three and a half percent on a 30-year fix. So all these people have boughten homes and they took on a 30-year fix. Let's call it, three and a half percent. Now that's a great loan. And for many people, that is going to be a loan that they're going to want to keep for long-term. But how many people are out there that took on a 30-year mortgage but know that they're not going to keep it for 30 years and may only keep it for, five, seven, or ten years? So I talk to these customers and they go, "I need to take some cash out of the property." They've built up the equity in their home. Their home's gained in valued. And so they've got an equity position that was not the case when they bought the house. And what people are allowed to do at that point is take actual cash out of their property to pay off debt, to do home improvements, to buy another property, to pay for college education. And I find how many people get stuck on this idea of, this 30-year fix is such a low interest rate. Why would I change that? Well, the reason you should maybe change that and take advantage of taking cash out is because that loan doesn't suit you anymore. Your loan now can be utilized to pay for college, pay for the home improvements, pay off debt. And so stop looking at the mortgage as this long-term product that you're going to keep and you're not going to change. How are you utilizing it on your behalf? And speaking with a loan officer like myself, we find these opportunities on a regular basis where people are in a debt position. They've got 40, $50,000 in credit cards. They have a 30-year fixed rate of, let's call it, 4%. And they are not going to keep the house because they're going to be downsizing in five to seven years. They've had this house for, let's say, 10 years. They've built up equity. So they've got a couple hundred thousand dollars in equity in this property. With a quick conversation, we're able to identify, A, they're not going to live in the house, so why are they going to keep a 30-year fix? B, they've got credit card debt. And why not take cash out of their property, pay off the debt, and take on a lower term, maybe a five, a seven, or a 10 year fixed loan that has a lower interest rate? And when you do that, across the board, your cash flow has improved substantially. You're not making those minimum credit card payments anymore. You're not paying those high interest rates on credit cards of 10 to 30%. You're paying a little bit less on your big loan, which is your mortgage, at a lower interest rate. All the while knowing that the idea is that you're going to be moving in five, seven, 10 years. So in this marketplace, are you in a position to refinance where it would make sense? The only way you're going to know is if you can discuss it with a loan officer. You might think you have a great interest rate, but I want to make sure that I'm in front of you and give you options that will improve your financial position. Will create wealth in your life. And how are we going to do that by utilizing the home that you've boughten. What are we going to do to improve your situation. So by a quick phone call, quick consultation, we identify what the needs are and if there's an opportunity to improve, and sometimes there's not. Sometimes the 30-year fixed mortgage is going to be the way to go. Or maybe they are in a house where they bought it with a five-year fixed or seven-year fixed loan and they want to stay there longer. So then we put them into a 30-year fix. So just know that whenever you're buying a house and you're utilizing a product or a program with a certain bank, you're not tied into that. You can refinance it any time. Pre-payment penalties is something that you hear about a lot. But pre-payment penalties are really not being utilized in the business. What that is, is if you were to pay off your loan early within three to five years, you were actually penalized by the lender that held the loan upwards of one to 2%. That was really expensive and it kept you into that mortgage. Well, nowadays, mortgages really aren't being written with pre-payment penalties. So your opportunity of being a home owner is to make sure that the program that you have, the interest rate that you have, the equity that you have in your house is serving you in the correct way. And so by having a conversation with a loan officer, by looking at what your needs are, you can determine that fairly quickly.

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