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Author: Todd T

Should I refinance to get out of debt?

Written by Todd T on . Posted in Blog.

The reality is, with today’s low interest rates, if you own a home you could be spending way more than you should be on your mortgage. So if you have other types of debt like credit cards or other loans that you are paying a higher interest rate on, you could use the savings to pay it off. In many cases you could even lower your mortgage payment AND pay off other high-interest debt.

Another lesser-known bonus that most people don’t think about, is that mortgage interest is tax-deductible. So you can cut down on your tax bill too!

Here’s an example: If you can save just 1% on an existing mortgage of $200 thousand, you could put over $100 per month towards your other debts without raising your mortgage payment a dime! Plus you’ll save another $40,000 or more over the term of the mortgage. That’s huge!

In many cases, if you want to get your debt under control, your home sweet home could be just what the doctor ordered. Naturally, every situation is different. Give us a call and let’s talk through options to see if this could work for you!

Free Money: How to benefit from a no-cost or lender-paid closing cost mortgage.

Written by Todd T on . Posted in Blog.

If someone walked up to you and told you that you could save hundreds, thousands, or tens of thousands of dollars without paying a dime you would automatically think it’s too good to be true or that there has to be a catch. Well, it’s true and there isn’t a catch.

A no-closing cost or lender paid closing cost mortgage is about the closest thing to free money that you can get. You benefit by lowering your interest rate, lowering your loan term, lowering your loan term and interest rate, or pulling cash out of your home without paying any closing costs which can literally save you thousands of dollars.

Here’s how it works.

Closing costs exist on all mortgages. That’s a given. But if we negotiate to have the lender pay for them while still improving your interest rate, that’s a win-win! And the savings are immediate. You don’t need to live in the in the house for a certain period of time to recoup those costs. Don’t need the cash from a refinance? It may be smart to do it anyway. If you apply all of the monthly savings to your principal balance each month, you’ll build equity faster and can possibly pay your loan off years ahead of schedule.

A lender-paid closing cost mortgage can also be a great option for borrowers purchasing a home, especially when there are no seller-paid closing costs negotiated into the purchase agreement. While a no-closing cost mortgage might only have a slight impact on the overall payment, it can  save thousands of out-of-pocket dollars that can be used for furnishing the new home or making improvements.

Make sure to ask your mortgage broker if a no-closing cost or lender-paid closing cost mortgage is right for you. And always be sure to work with a mortgage broker who will do the analysis to make sure you’re getting the best mortgage for your needs.

When is the right time to refinance?

Written by Todd T on . Posted in Blog.

There are three main things to consider when thinking about refinancing:

  1. The interest rate
  2. How much it costs to refinance
  3. How long you are plan to live in or own the property

If you’re thinking about refinancing, your current bank or lender might not be the best place to go for advice. Why? Because they make money from servicing your mortgage and if you refinance with someone else, they will lose that income. Talk to an independent broker to get competitive rates and to research scenarios that will work best for you.

Know your break-even point.

There are a variety of rate and closing cost options available to most borrowers. Typically when deciding if a refinance makes financial sense, you should look at two different types of break-even analysis.

How long you’ll have to live in or own the home you are refinancing to recoup the closing costs and maximize the interest savings. For example, if you are going to save $100 per month on your interest and the closing costs on the new loan are $3,000, you will need live in or own the house for the next 30 months or 2.5 years to recoup the costs that you paid to refinance. As long as you’re planning on living in the home for at least the next 30 months or 2.5 years, it should make sense to move forward with a refinance.

Get the best rates available and an appropriate closing cost.

Next analyze the interest rate and amount of closing costs you should pay. Your mortgage broker should be able to give you three different interest rate and closing cost scenarios for review. Usually, the lower the rate, the higher amount of closing costs you will pay. You might even have a no-closing cost option available at a slightly higher interest rate. How long you  plan to live in or own the property will determine which is your best fit.

A good mortgage broker will be able to recommend an option that is right. If your bank, credit union, or mortgage company can’t walk you through these options, look elsewhere.

Why use a Mortgage Broker vs. Bank or Credit Union?

Written by Todd T on . Posted in Blog.

That should be a no-brainer. A mortgage broker does your rate shopping so you don’t have to. Plus, unlike banks and credit unions, mortgages are all they do.

Mortgage brokers have access to a wide variety of mortgage loan products that a bank or credit union might not offer. That ensures that you won’t get sold into a mortgage product that meets their needs and not yours.

Mortgage brokers typically can offer more options because they are approved with multiple lenders or banks, so a mortgage broker can pair your application with the lender or bank who has the best rates and fees for your particular scenario.

Another benefit of working with a mortgage broker is that if you do have any issues getting your application approved with a particular lender or bank, a mortgage broker may have alternative options with other lenders or banks that they do business with so you don’t have to start from scratch or walk away from purchasing your dream home.

More often than not, just because a bank or mortgage company tells you no, it’s because they don’t offer a particular loan product or don’t have the underwriting parameters that fit your needs. When it comes to purchasing your dream home, getting the best advice on refinancing, making sure you get the best mortgage that fits your needs, or anything mortgage related, you should always work with a mortgage broker.

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