Why is it a Great Time to Refinance?
We’ve hit the biggest week-to-week drop in 30 yr. fixed mortgage interest rates since 1981 and lowest interest rate environment over the last 40 years! Although people may feel that these rates may continue to drop, today, this is one of THE LOWEST interest rate environments EVER! A very profitable environment right now for many qualified homeowners.
I would caution though, due to the massive layoffs and job cuts of the mortgage industry, lenders, brokers and loan officers are inundated with stacks of applications and limited man-power to process and approve the loans.
If you want to put time on your side, don’t lose upcoming critical business days to process your loan. Get the ball rolling and mortgage professionals can still guide you along by “FLOATING the RATE”. In others words, get your application submitted, get your home appraised, mortgage underwritten and approved. Once all this is done, THEN you can lock your interest rate.
Will rates get lower than this?
Maybe…but we’ve never seen overall rates this low. Keep in mind that these rock bottoms rates are for specific borrowers who fit tight, financial criteria for the banks to approve mortgages at these rates.
What are a few (3) benefits for refinancing?
1. First, the harsh lessons of today teach us that a mortgage is no longer JUST a mortgage…but rather a double-edged sword for building wealth. SLOW DOWN-take the time to understand the intricate details in how you can put your mortgage on your side as we may NEVER experience opportunities like this ever again! Done right, you can increase your cash reserves, re-build lost home equity and declining retirement accounts. According to a recent report by the Federal Reserve Bank of Chicago, there is a trade-off between sending extra payments to your mortgage company vs. applying those same dollars towards your retirement accounts. This mis-allocation of savings is costing American homeowners over $1.5 BILLION per year!
2. Refinancing from a higher interest to a lower interest will allow you to free up some monthly cash-flow and provide relief from some of the tightness that everyone is feeling right now. Plus the points and interest you pay will pay on a new mortgage, up to a certain limit, is tax-deductible! The IRS, even through current rules, have always “incentivized homeowners” to do this. It keeps money-in-motion and flowing throughout our economy.
3. By refinancing, you can”cash-out” any available home equity left in your home. If so, it’s best to not payoff consumer debt rather, SAVE these proceeds in a liquid, safe, tax-advantaged account. Over time, this has the potential to grow and compound at a rate higher than what you are borrowing it at AND exceed the balance that you owe on your mortgage balance…ALL without changing your monthly mortgage payments! According to the 2008 released-book, the Boomer Consumer, many homeowners HAVE NOT BEEN PRESENTED OPTIONS and UNAWARE of how to use home equity to fund or in this case, recapture financial control and security!
I highly encourage people to work with a mortgage professional than can show you customized options and mortgage programs that work specifically for you!
When I first read this “First, the harsh lessons of today teach us that a mortgage is no longer JUST a mortgage…but rather a double-edged sword for building wealth. SLOW DOWN-take the time to understand the intricate details in how you can put your mortgage on your side as we may NEVER experience opportunities like this ever again!” I was a bit taken aback and thinking how can such be a possibility? And finally, after reading through the “Refinancing from a higher interest to a lower interest will allow you to free up some monthly cash-flow and provide relief from some of the tightness that everyone is feeling right now. Plus the points and interest you pay will pay on a new mortgage, up to a certain limit, is tax-deductible!”, this made me realize on how much I haven’t been able to figure out that the idea is very much correct… and yes, Matthew Sapaula is right, in this very sense…that I can”cash-out” any available home equity left from my home and have the opportunity to SAVE these proceeds in a liquid, safe, tax-advantaged account.