There is a refinancing boom going on (yes, still). There are many reasons to consider refinancing and rates alone are not the only determining factor in deciding to refinance. I want to address what I feel to be overlooked possibilities and opportunities in today’s current marketplace.
Drive around specific neighborhoods and you can see a robust amount of construction activity, even though there are also those still recovering from the last nine years. There was job loss, equity erosion and credit report damage pushing some to file for bankruptcy, short sale their property, give up their deed, and go into foreclosure. These unfortunate situations affected one’s individual credit, equity, and net worth and, consequently, an ability to borrow money. Our days are full, and it’s very easy to let time and opportunity slip by. But there is a financial light of opportunity at the end of the rainbow. You can leave Mitzrayim and climb from the mud pits to make your financial Exodus.
Time heals. Many years have passed and three important factors open up possibilities that did not exist:
1. Borrowers with damaged credit have passed seasoning periods (waiting times after occurrence), and their credit has improved. Seasoning along with improved credit scores opens the door to possibly refinancing or buying again.
2. The unemployed may now be employed or self- employed.
3. There has been significant property appreciation in the past few years.
Many owners can now:
1. Sell their home at a higher price and downsize.
2. Refinance, lower their payment, rent their current home, and relocate to a lower priced rental.
3. Refinance due to a higher value and improved credit scores.
a. A combination of a lower rate and mortgage insurance elimination can lower payments.
b. A rate can be the same or higher and still lower your payments.
4. Consolidate credit card and education debt into one mortgage loan to lower the total payment.
5. Switch from a 30-year fixed-rate to a lower rate adjustable mortgage.
a. Suggestion: Take an adjustable mortgage, if you plan on moving or paying it off before the adjustment period.
b. Offset lack of equity by:
1. Borrowing with lender paid mortgage insurance which is inexpensive.
2. Taking a Harp mortgage.
3. Building equity into their home. Refinance into a one-time close construction loan. You can build equity and lower your mortgage payment in one shot.
c. Pay off an existing mortgage with a reverse mortgage and free up cash (great product for the right people over 62).
There is a pot for every cover. It’s important to know your reality and work within that reality to make your best financial and/or financing decision.
Carl Guzman, NMLS# 65291, CPA, is the founder and President of Greenback Capital Mortgage Corp. He is a residential financing expert, and a deal maker with over 25 years’ experience. Carl and his team will help you get the best mortgage financing for your situation and his advice will save you thousands!
By Carl Guzman
