Refinance?
5 Reasons To Refinance
GET CASH TO PAY OFF DEBT
Have you ever thought of paying off credit cards (especially after Christmas shopping!)? Or what about student loans? Or your car note? Or any other debts you may have? In addition to relieving some of your debt obligations (with much higher interest rates), a Cash Out Refinance gives you a fixed monthly payment and tax savings in the form of IRS write offs of mortgage interest!
In the state of Texas, in order to get cash out of your home equity, there must be 20% equity left into the home (i.e., If the home is worth $200,000 when doing a Cash Out, the new mortgage cannot be higher than $160,000). We have seen some strong appreciation, however, in DFW over the past 4-5 years which is helping in the value/ equity positions. Texas does have some weird rules on Cash Outs, though, so don’t trust anyone but a true local mortgage expert, such as myself, to guide you through this process.
REFINANCE TO LOWER RATE
Refinancing to a lower rate is not right for everybody, but a great rule of thumb is:
- Loan amount between $100,000-$150,000 – Interest rate should drop 1.00% or more, unless refinancing to a shorter term or Cash Out refinance.
- Loan amount between $150,000-$250,000 – Interest rate should drop by at least .50% before it typically makes sense.
- Loan amount $250,000 or more – If the interest rate drops by at least 0.25%, we should look at the numbers.
Again, these are only general rules. Everyone’s situation is different, so it’s best to let me look at your specific circumstances and make an expert recommendation.
GET CASH TO BUY ANOTHER PROPERTY
An interesting trend that we are seeing is taking money out of one home to purchase to put a strong down payment on another one (i.e., investment property). With interest rates being so low, clients feel that they should take advantage of it for their primary home as well as an investment property as a “win-win” situation. Additionally, the 16.7% projected home value appreciation over the next 5 years rivals many stock market investment returns. I can discuss with you the pros and cons of doing this as well as whether it is right for your financial portfolio.
HOME EQUITY LINE OF CREDIT RATES ARE INCREASING
Do you currently have a HELOC (Home Equity Line of Credit)?
HELOC loan rates will be increasing in 2019. Plus with the new tax law the interest will not be tax deductible anymore. Combined with the increase in home equity over the past few years, a cash out refinance or renovation loan (if using funds for renovating the home) may be the better way to go.
GET CASH TO PAY OFF A FORMER SPOUSE OR GET AN ES OFF THE MORTGAGE
I have had multiple conversations over the years with clients who need to pay off specific equity in their home to a former spouse. Believe it or not, many other Loan Officers out there do not know how to do this so it does NOT fall under the weird Cash Out rules, therefore limiting the equity allowed. It is so important to only trust an expert in any mortgage transaction, but especially this one. Let me know how we can assist in making this as painless as possible.
"Loans are what we do, not who we are."- CEO, Steve Jacobson
“Loans are what we do, not who we are.”
– CEO, Steve Jacobson