Why Refinance Your Home at a Lower Mortgage Rate

Lower mortgage rate
Some people are content with their current mortgage rate and never explore the possibility of refinancing their home. Mortgage rates change on a regular basis, based upon economic factors. After the housing market crash and economic crisis about a decade ago, interest rates dropped significantly and have remained low. As such, it could be beneficial to check out the current interest rates on various loan products through a qualified mortgage broker. Lower Mortgage Rate A common myth is to only refinance when interest rates drop by two percentage points or more. However, even half of a percentage point reduction can help save you thousands of dollars during the life of your loan. To see how much you could potentially save, it is easy to have your broker perform a comparison between your existing loan and potential new loan. If you have an FHA loan and are paying mortgage insurance premiums, depending on the amount of equity in the home, refinancing could help eliminate the insurance payments and provide you with a lower interest rate, too. When refinancing, it is better to opt for a rate and term program, where you are only refinancing the existing balance on the current loan into a new one at a lower interest rate. If your goal is to pay off your home sooner, consider a shorter repayment period if you can afford slightly higher monthly payments, as this will also help save you money in the long run. To learn more about refinancing options and different types of home loans you could qualify for, call the mortgage experts at Elite Financial by phoning (805) 494-9930 now.
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The Pros and Cons of Paying Off Your Mortgage Loan Before Retiring

As you are nearing retirement, it is not uncommon to consider paying off your mortgage loan. Before you tap into your retirement savings or other cash reserves to pay off the loan, you need to weigh the pros and cons.

Advantages

Paying off your mortgage means no more monthly payments on your home. You can use the money on other things you enjoy, like traveling.

Another benefit is that owning your home clear and free can give you peace of mind. You do not have to worry if things are a bit tighter financially once you retire.

You could protect the value of your property and avoid getting into a situation where you owe more than the home is worth, which affected many people when the housing bubble burst about ten years ago.

Mortgage Loan

Disadvantages

You will lose any tax deductions you currently receive on the mortgage interest. While these might not be much, they do help reduce your tax liability.

You could find yourself short on cash resources in the future, which could affect your ability to pay other obligations. It might make more sense to pay off higher interest credit cards and debts first, before your mortgage.

Other investments could yield a higher return. Rather than pay off the mortgage, you may want to consider refinancing at a lower interest rate and use your cash to invest in bonds or other investments with a higher interest return rate.

To learn more about refinancing options for your home or to find out current interest rates, please contact Elite Financial at (805) 494-9930 today.

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Market Update: What Does the Recent Rise in Inflation Mean?

Inflation is a word that makes people cringe because they know the buying power of their money will be reduced unless their incomes are adjusted. Inflation occurs for a variety of reasons and is measured by comparing the costs of goods and services from one period of time to another, typically year-to-year.

One of the more common causes of inflation is when the value of the dollar decreases compared to the values of other currencies. Another form of inflation is referred to as “cost-push” inflation, which occurs when demand for goods or services is significantly higher than the supply. For example, shortages of apartment homes result in increased rental rates, often substantially exceeding a monthly mortgage payment to buy a home.

Mortgage Company

The most widely accepted method to measure inflation is the consumer price index (CPI). The CPI can be used to compare the cost of living or focused on specific products or services. The percentage change in CPI from one period to the next is referred to as CPI inflation.

For September, CPI inflation rose 0.3% with the greatest inflation in energy and food prices. In the housing industry, for the same period, housing inflation rose 0.4%. Housing inflation is the amount a homeowner would have to pay to rent a home of equal value, which means rental rates are rising. So, in the long run, purchasing a home today will be cheaper than renting and ensure that the purchasing power of your money for housing does not lose its value.

Now is a good time to buy a home or consider a refinance for a lower rate. For current interest rates or information about FHA loans and other conventional mortgages, please feel free to contact Elite Financial at 805-494-9930!

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Cash-Out Refinance: A Great Alternative to a Home Improvement Loan

Many people today are staying in their homes longer, especially if they like their neighbors and the location. After living in the home for a period of time, they find they have outgrown the available space or want to make other changes to update the home’s look and appearance. Rather than sell the home, people are investing in home improvement projects to make the modifications they desire.

The costs for home improvements, like adding on additional rooms, can be substantial. Some people opt for a home improvement loan to help finance the project costs. However, home improvement loans are similar to second mortgages, where you use your house as collateral. The interest rates tend to be somewhat higher, meaning you will pay back substantially more in interest over the life of the loan. You will also have two separate mortgage payments to make each month.

Home Improvement Loan

A better alternative to make home improvements is with a cash-out refinance mortgage loan. This option often features the same or lower interest rate than your current mortgage. Instead of having two loans, you still have a single mortgage against the home with the principal balance now including the cash you took out for your home improvement project.

Regardless of the size of your home improvement project, a cash-out mortgage from Elite Financial can help ensure you have the funds needed to complete the project to your specifications. Contact us at 805-494-9930 for more details!

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Differences Between Home Equity, Cash-Out Refinance, and Personal Loans

When you need some extra cash for home improvements, consolidating bills, or other such reasons, you have several options to choose from, including using different types of home loans to tap into the equity in your home. It is important to carefully evaluate each of your options and select the one most appropriate for your particular situation.

Home Equity Loan

Home equity loans are essentially a second mortgage taken against the equity in the home. One drawback is that second mortgages tend to have higher interest rates than your first mortgage. Another option under the home equity umbrella is called a line of credit. Rather than taking out a lump-sum second mortgage, you are given a credit line to borrow against as you need it, much like a credit card. However, the interest rates for this option can, and do, adjust on a regular basis. If you are still unsure, it might be worth speaking to Equity Legal advisers to guide you.

Cash-Out Refinance

Cash-Out Refinance

Cash-out refinance loans allow you to consolidate your existing mortgage and equity, and draw out the proceeds in cash. While the interest rates are similar to your existing loan, and you avoid higher rates with home equity loan options, you are basically resetting your mortgage and starting over.

Personal Loans

Personal loans are an ideal option when you do not need large sums of money and intend to pay off the loan in a relatively short period of time. Plus, you are not touching the equity within your home.

For assistance with cash-out refinancing programs or to learn about other options, please call Elite Financial at 805-494-9930 today!

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