Three Reasons to Refinance

Three reasons to refinance a home include lowering the cost of housing, shortening the term of the mortgage to pay it off sooner or to using the equity to accomplish another purpose.

Replacing the mortgage at a lower interest rate, which is entirely possible in today's market, would reduce the payment.  On the other hand, shortening the term of the mortgage could make the payments increase but would allow the home to be paid for sooner.  In either case, the equity would not be reduced unless the refinancing costs were rolled into the new mortgage.

Refinancing the home to take money out would increase the mortgage on the property and lower an owner's equity; careful consideration should be made before doing so.

Mortgage rates are considerably lower than credit card rates and usually lower than short term borrowing like student loans or car loans.  For that reason, homeowners will sometimes refinance to payoff higher cost debt.

Some people refinance for more than their current balance to improve their cash position, possibly, to have funds available in case they need it.  Other reasons could be to use it for an investment such as rental property or other things.  Still others may use it to make capital improvements on their home like remodeling or a pool.

Another legitimate reason to refinance may be to combine a first and second lien on the home that might result in lower payments and a savings in interest. 

One more situation that causes a person to refinance a home is to remove a former spouse or co-borrower from the existing mortgage.  In the case of a divorce, a couple may no longer be married and one of the former spouses may have no financial interest in the home any longer but because they signed the note originally, they are still liable along with the other spouse.  This could be an untenable position.

There can be a lot of reasons that cause a homeowner to refinance the home.  The equity is a valuable asset that has powerful borrowing power combined with the good credit and income of the homeowner.  A Refinance Analysis can help you to determine the new payments and how long it will recapture the cost of refinancing.

For the recommendation of a trust lender, give me a call at (602) 300-7007.

Things Have Changed

The soothsayer in Shakespeare's Julius Caesar issued his famous warning "Beware the Ides of March."  Who knew that in 2020, around the middle of March, the world, as we knew it, would force such dramatic changes on us from the Coronavirus.

In America, it has brought our economy to its knees as we sheltered in place for over four months.  During this time, changes have affected our lives and many of those changes could be permanent.

Previously, smaller homes were becoming the trend for not only efficiency but upkeep so owners would have more time to do things including travel.  Now, travel is minimal and our world, in some respects, is reduced to our home.

For families with children, their home has become a school.  With so many people working from home, it has become our office or store or studio.  If there is more than one working adult in a home, it needs to have space for each party to work.  The home fitness industry is experiencing record sales in exercise equipment so the home can become a gym.

Since we're all spending more time at home, it is also the place to recreate.  We're cooking more; a larger kitchen and dining area would be nice.  We want to enjoy the yard, garden, pool or balcony and our current home may not even have them or we'd like to upgrade. 

People are wanting and needing more space to do all of these things at home.  Many experts are anticipating that these changes we thought were temporary may be part of the new normal even after a vaccine and cure have been discovered.

If you have had any of these thoughts and would like to know more about how to buy or sell a home in our current market, we would love to tell you about the many options available while being responsible to stay safe.  Whether it is buying for the first time, moving up or moving on, I would like to help.  Call me at (602) 300-7007.