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.
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.
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.
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.
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!
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.
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!
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 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 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!