Your Money’s Worth

Ah, New Year’s resolutions. So easy to make, so hard to keep. There are many strategies you can employ in 2015 that have the potential to significantly improve your net worth. Don’t procrastinate. What you do in the next month may have long-lasting impacts.

Refinance. Don’t wait any longer. Be proactive and get your refinancing done now. Get the low rates while you can. Many people assume that they cannot qualify for a home loan. They think they don’t have enough income, or their home is underwater, or they don’t have enough equity. Don’t assume. Check with your lender this month. You may find that there are ways to lower your payments or pay off your home faster as you take advantage of annual percentage rates (APRs) in the 3’s and 4’s, even for jumbo loans. If you can’t qualify right away, find out what you need to do to position yourself to get approved later this year.

Convert an adjustable-rate mortgage to a fixed-rate loan to take advantage of fixed, stable rates. Consider if moving credit-card and other debt to your home loan is a good option for you. Maybe you think you don’t want to borrow more money. But guess what? You already have borrowed the money and chances are your credit-card rates are in the double digits. If you feel you are not disciplined enough to overpay your new, lower-rate mortgage to pay off the old credit-card debt, then segregate the new debt with a home equity line of credit (HELOC) to pay it off and get your financial house in order. Either way, refinancing and paying off existing debts may end up saving you more in the long run.

Get free and clear. Even a loan with a rate in the mid 4’s with 28 years remaining could be moved to a 20- or 15-year fixed-rate loan, cutting many years off the mortgage and potentially saving your net worth tens of thousands of dollars over the life of the loan. Consolidate your first and second mortgages into one new, low, fixedrate loan. Check with your loan originator to see how you can merge two mortgages on your home into one.

Cash out equity in your home to buy an investment property or second home for retirement. How? Refinance your current primary residence and take extra cash out for the down payment on your additional home purchase. We are seeing a combination of low rates and low home prices, but it won’t last forever. Rent your new purchase and let the payments from your tenants help pay your mortgage.

Grow your investment for retirement using short-term rental properties. Use rental payments from vacationers as a resource for monthly mortgage payments on investment properities. For as little as 20 percent down youmay be able to own the property free and clear in 15 years.

Address family matters now while the market is in your favor. If you are divorcing or need to take former partners off a mortgage loan, or need to remove yourself as a co-signer on a loan, refinancing now may be the rightmove for you.

You’ve heard it for a couple of years now: refi refi refi. Even if you refinanced a few years ago, APRs in the 3’s and 4’s warrant one more look as you plan your finances for the next 10 to 30 years. Don’t wait and be sorry later. Contact your local lender to see if youmay qualify.

Francis Phillips (FPhillips@fcbmtg.com) is senior mortgage loan originator with First Choice Loan Services in Santa Fe. He has served as director of business development for national mortgage companies. He and his mortgage partners have funded and built three homes for Santa Fe Habitat for Humanity.