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Opportunities of Refinancing

Apr 23
3:45
AM
Category | General

When you refinance to a lower rate, you'll get a lower payment. But the opportunities don’t stop there. Take a look:

Reduce your balance faster. 

With a lower interest rate, you pay more principal with each payment, especially in the first years of the loan. 

Example: After five years of payments on a 30-year loan of $200,000 at 4%, you would pay $19,706 in principal vs. $17,105 on the same loan at 5%. That's an extra $2,601 in benefit on top of the $7,052 of interest savings. Total advantage = $9,653

Own Free and Clear Sooner. There are two ways to make this happen:

  • Pay extra principal. Apply your monthly savings toward principal to shorten your loan term by several years. Example: Using the same loan terms from above, pay your $118/month savings as extra toward principal and cut the loan from 30 to 24.33 year.
  • Refinance for a shorter term. Rates on 15-year loans are typically lower than 30-year loans, so a payment on a shorter term may still be within a comfortable range for you.

Maximize Your Rate of Return Through Investments. 

If you deposit the $118 monthly savings from the example above into a tax deferred account earning 6% over time, it will grow to $81,852 in 25 years. If you use the savings to increase your 401K contribution with a 50% employer match, that figure would equal $122,782. Earning 6% on your money may be tough right now, yet historically, returns on a properly balanced and diversified portfolio are 7% or better. Always consult with a properly licensed financial advisor when making investment decisions.

Tap Into Your Equity. 

If you need to make repairs or improvements, you may be surprised at how much cash you might be able to free up without increasing your monthly payment. The same can be said for financing college educations or purchasing a second home or investment property.

Enjoy Peace of Mind. 

There’s comfort in making a prudent decision and putting a plan into action.

We're here to review your options and help you decide what might be right for you.

Try Our Refinance Calculator Here.


For the Week Ending April 19, 2019

 

Please enjoy this quick update on what happened this week in the housing and financial markets.

 

 

 

Recent optimism in the global economy has been helped by upbeat economic data in China. This has pressured mortgage rates to move higher this week.
Retail sales surged in March at the fastest pace since late 2017, increasing 1.6% from February. Spending on autos, gasoline, furniture, and clothing all jumped.
The Fed's latest report shows labor markets remaining tight and economic activity growing at a slight-to-moderate pace. Despite these factors, inflation has not picked up.

 

Home builder confidence rose to 63 in April and has spent the last 3 months in the 60s, according to the NAHB index. Last year's high was 70, reached in May.
As sea levels rise, architects are looking for ways to make homes more resilient to flooding. Floating homes are being considered as a solution for coastal areas.
Virtual staging, using software to digitally change a home's spaces and show new possibilities, is now a reality that is catching on to market a home for sale.

Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time.


There are 2 types of Debt-to-Income ratios (DTI) Greenway considers when qualifying you for a mortgage:

  • Front-End (also known as the Housing Ratio)
  • Back-End (also known as the Total DTI).

How is each calculated? Watch this short video by The Mortgage Expert, Erin Carvelli.

 

DTI or Debt-to-Income Ratio is the percentage of a borrower's gross income available for paying your bills.

The Front-End Ratio

  • Also known as The Housing Ratio
  • The ratio of gross income to the borrower's mortgage payment including PITI

The Back-End Ratio

  • Also called the Total Ratio
  • This is the ratio of the borrower's gross income to all expenses. Including:
    • Mortgage with PITI
    • Consumer debt such as credit cards and car loans
    • Student loans
    • Alimony and child support

Read our in-depth post here


Additional Resources


Want To Know More About Erin, Her Team and the Mortgage Process?

Check out her All Things Mortgage page!

She's posted tons of useful resources and keeps it updated


Are you ready to take the next step?

It's time to get pre-approved with Erin the Expert!

 

 

 

 


Every family has a list of important dates. We celebrate birthdays, anniversaries, pet adoptions…and the list goes on. For 64.4 percent of households in the United States, this list includes the day they became a homeowner for the first time!

Why is this date important? Homeownership is not just a roof over your head! It represents shelter, stability, wealth, and pride! For decades, homeownership has been an important part of the American Dream!

However, many question if the next generations see the same benefits of homeownership as their predecessors.

In case we have forgotten, some of those benefits are:

Non-Financial Benefits

  1. Educational Achievement: Homeownership has a positive impact on academic achievement, including reading and math performance in children 3-12 years old.
  2. Civic Participation: “Owning a home means owning a part of the neighborhood.” Homeowners have a stronger connection to their neighborhood and are more committed to volunteer.
  3. Health Benefits: Adjusting for a range of demographic, socioeconomic and housing-related characteristics, homeowners have a substantial health advantage over renters.
  4. Public Assistance: The report shows 47% of homeowners use their home equity credit lines to help pay other debts, diminishing their need for public assistance.
  5. Property Maintenance and Improvement: A well-maintained home not only generates benefits through consumption and safety, but a high-quality structure also raises mental health.
  6. Pride of Ownership: This place is uniquely “yours.” You can customize it according to your likes and personality.

In addition to financial benefits, homeownership also brings significant social benefits. These not only pertain to the family, but extend to the communities, the state, and the country!

Financial Benefits

Buying a home is an investment in your future!

  1. Appreciation: On average, home prices are appreciating annually at a rate of 3.6%. This helps to create a safety net.
  2. Forced Savings: Your mortgage is like a forced savings plan! With each payment, you are reducing the principal of your loan.
  3. Home Equity: Homeownership builds equity every single month. You can later use that equity to start a business, send your children to college, etc.
  4. Net Worth: A homeowners’ net worth is 44x greater than renters! This gives you the financial freedom to invest.
  5. Stability: Rent prices increase 4% annually! A fixed mortgage payment allows you to save for future projects and guard against inflation.
  6. Tax Benefits: The government has created tax benefits to encourage customers to purchase. (Talk to your CPA to see which benefits apply to you).

Bottom Line

Homeownership is and will always be part of the American Dream! There are many financial and non-financial benefits to take advantage of when owning a home. If owning a home is part of your dream, reach out to us today! We'll help you get the process started.


For the Week Ending April 12, 2019

Please enjoy this quick update on what happened this week in the housing and financial markets.

The consumer price index rose less than forecast in March. A key measure of inflation, this reading supports the Fed's decision not to raise rates this year. 
Producer prices increased by the most in 5 months in March. However, underlying prices remained soft, an indication of tame inflationary pressures.

Housing sentiment surged in March, with sellers the most optimistic. Consumers who say it's a good time to sell increased 13% from February, up 4% from 2018.
CoreLogic says mortgage delinquencies in January were the lowest for that month in 20 years. Serious delinquencies dropped to 1.4% from 2.1% in 2018.

Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are 


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