Locking in low payments for the long term
Right now, a lot of people are facing slowdowns in either their businesses and they are faced with a very difficult situation. Households are being forced to improve their monthly budget and plan for the unexpected. One of the major ways they can do that and not have to cut into their lifestyle at all is refinancing their house. Let’s look at a typical scenario for someone right now and how much they can save. We will use someone that owes $350,000 on a 30 year mortgage: Current Loan New Loan
30 year Mtg 30 year Mtg
3.50% 2.0% (2.1% ARR)
$1571/mo $1323/mo
The borrower is locked into a $248 monthly savings for life on the mortgage. This scenario is also rolling all of the closing cost into the new loan so the borrower does not have to bring money to the table. The additional $248 can be used for living expenses, paying down the mortgage quicker or even investing into beaten down stock prices (consult a financial advisor).
It’s important to note that refinancing involves closing cost for the lowest rates possible (example above). Even though cost can be rolled into the new loan, a borrower needs to calculate the break-even point. For example, if the above loan example has closing cost of $7000, a borrower would need to keep the mortgage for 28 months ($7000/248) to break even. If the borrower plans on moving before 28 months, they should consider a loan options with a slightly higher rate but lower cost.
By taking a little time and effort, the mortgage vehicle can provide a financial advantage that may not be here forever. The mortgage process is much simpler than in the past with digital signatures, streamlined processes and technology. I cannot predict the future of interest rates but when we are at historic lows, it’s a good bet that rates will go up eventually.
There is a right loan option for different situations including jumbo loans. Always consult with an experienced mortgage expert to make sure the savings are maximized.
Key One Capital Mortgage Corporation (NMLS 872571) is a client-centered company founded by professionals with over 25 years of experience. It is our mission to provide paramount communication and service to our clients. Paul Baltrun (NMLS 393284). Secure and efficient title provide by preferred vendor, Trident Title, LLC.
954-329-2964