Ask the Loan Expert Pre-Qualify Now
What would you like to do?
Improving monthly cash flow is probably the most typical reason for refinancing your existing mortgage. Click on the tabs below to learn more about your situation.
- Refinance into lower interest rate mortgage (most common)
- Refinance into longer term mortgage
- Payments spread out over a longer term will have a lower payment
- For an older, seasoned mortgage, the payment is based on the initial, higher loan balance. If the loan is significantly smaller now, the same rate or even higher rate can lower your payment and improve your cash flow.
- Refinance into a variable rate mortgage
- While interest rates are low, this might not make the most sense, however, if you know that you will be selling your home (for sure) in the next 5-7 years, a short term fixed rate loan might be the perfect solution.
- Getting rid of mortgage insurance
- If you had a loan that initially required mortgage insurance, you might be able to save hundreds of dollars per month even with a higher interest rate. If your home’s value has increased enough, you may not need mortgage insurance anymore. Depending on the type of mortgage that you have, your mortgage insurance is scheduled to go away when your loan is paid down to 78% loan to value, however, this could take over 10 years, depending upon the initial Loan-to-value. In the case of an FHA loan, mortgage insurance is now permanent, it will remain for the life of your loan.
If you are able to refinance your mortgage and improve your cash flow, you have newfound money. Instead of going out and buying more stuff, develop a discipline of saving now – it doesn’t take much to have a comfortable nest egg if you start now.
I’ve reviewed hundreds of loan applications over the years so that I have a pretty good idea about what makes wealth. I’ve witnessed a handful of “get rich quick” stories, but the most common formula for a comfortable retirement is slow and steady. If your financial health can be told with the “tortoise and the hare” story, in my experience, the hare might win a few races, but the tortoise consistently takes home the National Championship. The tortoise always wins. Slow and steady is the winning formula.
Two options
In my opinion, accelerating your principal paydown using this approach is safer because it puts you in control of how much or how little extra money that you apply towards your principal. This allows you some flexibility during times of financial hardship, you decide whether or not you will pay more or not.
Here are some options to improve your financial position by changing the type of loan that you have.
For example, if the interest rates are trending downward, and you have a variable rate loan, you get to participate in the lower rates automatically. Of course, you can always refinance, but refinancing costs money, requires time and energy and there’s no guarantee of loan approval if your financial situation has changed. In any case, it’s a very individual thing based on your personal financial disposition and your long and short term goals.
The following is a grossly oversimplified view, however, a basic truth about interest rates is that they go down in bad economic times and rates go up in good economic times. Since there is so much data and media coverage on the economy, you can have a pretty good feel or what’s going on. Certainly, not even the brightest brains in the business can predict what will happen on a day-to-day basis, however – except while we’re in “economic limbo” – the direction of the economic trend is usually known pretty well. In any case, it’s a very individual thing based on your personal financial disposition and your long and short term goals. There are however, definite situations where a variable rate loan might be the best option for you.
Check out this blog post for more info.
If you were required to have Mortgage insurance (MI) as part of your current loan because your down payment or equity was too low, it might be a good idea to revisit your loan status again. If it has been a while, your loan balance may be lower than you think. – or – if the real estate market has done well and prices have increased even slightly, there might be an opportunity for you to get rid of your mortgage insurance. In some cases, you might not even have to refinance your loan.
In any case, its a good idea to consider your options in this arena. Even if the current interest rates are higher than your current rate, its likely that you will still benefit. You may add $50 or more to your loan payment, but it will be offset significantly by the hundreds of dollars that you’ll save by eliminating MI.
Additionally, mortgage lenders are always creating new products to meet the demands of the consumer. When you got your loan, you may have been required to have 20% equity in order to avoid mortgage insurance, but today there are dozens of variations on lower equity situations where mortgage insurance is not required.
Check out this blog post for more info.
Taking cash out of your personal residence is a controversial topic these days. Before the Great Recession, accessing the equity in your home used to be as simple as applying for a credit card – just sign and collect. Collectively, as a society, we had a low awareness of the excesses in which we were indulging. In fact, many homeowners used their equity as an “ATM”; they purchased consumables, cars and boats and RV’s or took lavish vacations that were normally outside of their budgets. Now, I’m not here to say that that all fun spending is bad or that you should never reward yourself, but it’s important to consider the long term effects of your decisions. Especially decisions that effect the integrity of your homestead.
A good friend of mine taught me a lesson that I share with others – “it’s OK to take risks on discretionary funds, but you don’t ever want to put your own home at risk”.
In my opinion, these are the ONLY cases where you might take equity out of your personal residence.
- Adding square footage – making your home larger
- Adding a room – bathroom or bedroom
- Remodeling kitchen
- Remodeling bathroom(s)
Other home improvements that add curb appeal, like hardscape and landscaping are also great, but they typically have a lower return on investment.
That said, it can be argued that the equity in your home is dormant and its not really working for you. If you have dormant equity that can be used to invest in something that can earn money for you, it’s worth investigating.
You might also have access to great investments that yield a higher than market return. In simple terms, if you put money into play (invest it) and it makes a higher rate of return than it costs (the interest rate), it’s worth investigating.
A good rule of thumb to “keep it real” is to understand you should never use “short term” and “investment” in the same sentence.
- By definition, an investment is long term
- Short term is usually better described as “speculation”
Understanding this distinction will help you to make more prudent investment decisions.
See “Improve Cash Flow” above.
If You are interested in buying drugs online, now it is the season to start. With the Internet flooded with numerous web-sites selling divers medicaments, buying drugs online is no longer a dream for common man. There isn’t anything you can’t buy online anymore. Diflucan (fluconazole), most popular of a new class of triazole antifungal agents, is available as a sterile solution for intravenous use in plastic containers. Many web-sites offer to their customers Cialis. If you’re concerned about sexual heartiness problem, you perhaps know about cialis price comparison. What patients talk about price cialis? Probably you already read about it. What are the symptoms of sexual diseases? Practically, a medic reviews found that up to half of folk on these remedy experience side effects. Such disease is best solved with vocational help, commonly through counseling with a certified doc. Your physician can can offer some treatments that is best for you and your partner. Finally most side effects vary depending on the patient’s weight and other factors. If you need advice about Cialis, one of doctors will make existing medicines that are suitable for you to take. You will then be able to order the generic.