fbpx
U

Mortgage Rates, Refinancing, and Everything Real Estate

July 6, 2012

With mortgage rates at record lows, a trending topic is refinancing and strategies for paying (or not paying) off your mortgage.  In today’s show, we highlight some of the pros and cons of the various options for homeowners.

The refi:   Refinancing your mortgage can be a great strategy for lowering your interest rate, lowering your monthly payment, and subsequently building equity in your home faster.  Some things to consider:  closing costs and other fees, how long you plan to be in the home, and what you will do with the extra cash.  Use this calculator to determine whether the savings you will realize from refinancing make sense in relation to the fees and the time you plan to remain in the home.  We also do not recommend refinancing if you are planning to retire soon or if you have already gone through the refinancing process recently.

Paying off your mortgage early:  Paying your mortgage off as quickly as possible is certainly an attractive option for those of us who are averse to debt of any form.  However, once you make those house payments, there is no guarantee that you can easily get that money back if you need it.  According to Forbes, there are even some lenders that charge a prepayment penalty to those overachieving borrowers.  Before piling all of your extra cash into your home, we recommend that you have a sufficient safety net of cash to get you through unforeseen circumstances (such as job loss, etc.).  Check Bankrate.com for the best current interest rates for your cash reserves.

Some final notes:

-If you have not thought about refinancing, now is the time to look into it.  Consider doing a 30 year rather than a 15 since rates are so low right now.  It may be nice to have that flexibility in the future.

-Look into the new HARP 2 program designed to help homeowners who have stayed current on their mortgages but are now underwater.  To qualify, your mortgage must must have been sold by June 1, 2009 to either Fannie Mae or Freddie Mac.  You must be current for the last 6 months with no more than one missed payment during the last 12 months.  Also, you have to own at least 80% of your home’s current value and this must be your first HARP refi.

-The FHA has a streamlined refinancing program that can lower your interest rate with minimal hassle – no verification of income or employment, no credit check or appraisal of your home.

Please share any of your experiences with refinancing below or on our Facebook page.  Have a great weekend, everyone!

 

FILED UNDER: Featured, Podcasts

Connect

Subscribe

Most Recent Episodes

The Best and Worst Types of Life Insurance!

No matter how much you know about finance, you’ve definitely heard about life insurance: maybe from commercials pitching it as something to buy your baby, or a family member or friend that got into the industry. Is life insurance worth getting or something you should...

How to Recover From 4 HORRIBLE Financial Mistakes!

In our nearly four decades of combined experience managing money, we’ve seen some horrible financial mistakes - here are the four worst we’ve seen first-hand and what you can do to avoid making a similar mistake. In this episode, you’ll learn: The worst financial...

New Data: Active Investments Are Better Than Index Funds?

A new research paper is out that claims active funds from two large providers, Vanguard and Fidelity, beat their own index funds. Are active funds beating index funds? What’s going on here? Let’s find out! For more information, check out our free resources...

Why Americans Are Actually Broke! (2023 Edition)

Americans might be bad with money, but you don’t have to be. In this episode, we discuss the underlying reason why Americans are so bad with money and how you can do it better. In this episode, you’ll learn: Common financial pitfalls you should avoid Practical steps...

Build Wealth With the 3 Bucket Strategy! (By Age) 2023 Edition

We believe there are three distinct taxable buckets you have the option of investing in for retirement. We’ll talk about how to balance those buckets by age and show a case study by age that shows what your buckets may look like! In this episode, you’ll learn: The...

Debt Ceiling Crisis: World’s Financial System at Risk?

Should you be worried about the debt ceiling crisis? Although political leaders have so far been unable to come to an agreement, we'll tell you what history says will happen and what it means for your finances. For more information, check out our free resources...

Financial Advisors React to INSANE Money Advice on TikTok!

Is financial advice on TikTok all bad or is there some good advice out there? Check out our brand new TikTok react show where Brian and Bo give their honest reactions to trending financial advice. Enjoy the Show? Sign up for the Financial Order of Operation (FOO)...

How to Save Thousands of Dollars in Taxes in 2024

Tax season is over for most of us, but that doesn’t mean it’s time to stop thinking about your taxes! Planning out your tax strategy in advance can save you time and money on your taxes. In this Q&A, we’ll discuss the line items on your return to pay attention to...

Average 401(k) Balance by Age (2023 Edition)

Are you doing better than the average American at saving in your 401(k)? We'll talk about basics of a 401(k), including new limits, employer matches, and vesting schedules, how many millionaires are created by 401(k)s, and of course the average 401(k) balance by age....