Refinance How To Buy Your First Home | Expert Mortgage Guidance for First-Time Homebuyers

Refinance

One of the benefits of becoming a homeowner is that your home is an investment that increases in value over time.

Equity is the difference between what you owe on your home loan and the current value. There are many reasons you’d want to refinance to access that equity, but before we go into the most common ones, let’s first talk about interest rates.

When counseling our clients on refinances, we often hear objections regarding their current rate. They don’t want to take their 4% rate, refinance, and then end up with a 5% rate. This line of thinking doesn’t make any sense because it completely misses the point of a refinance.

Let’s do a test to prove our point. Without looking at your statements, answer these two questions below:

Open up your wallet and take a look at your credit cards. What’s the interest rate on those cards?

What is the interest rate on your car loan?

The answer we always hear is, “I don’t know; all I know if what my payment is”

You don’t care what those interest rates are because what matters to you most is the monthly payment on that bill.

So what does this little test prove? It shows that the interest rate is irrelevant; the monthly payments are important to you.

Now that we know that what you pay out each month is the most relevant let’s go over the most common reasons to access your equity. They are:

Paying off car loans and credit cards
Paying off student loans
Get cash out for home improvements or repairs
Get rid of monthly mortgage insurance

Using your equity for one or all of the reasons above can potentially lower your expenses tremendously.

Recently we completed a refinance for a repeat client. We paid off two cars and four large credit card accounts. Their home equity allowed them to eliminate these six accounts and save them $2000/month. That is $2000 they no longer have to account for in their monthly budget!

If you’re considering refinancing, remember that the interest rate doesn’t matter.

Getting rid of debt and lowering the amount you spend on monthly payments is what’s important.

Use the Apply Now button to submit your application to see how accessing your equity can work for you!