A higher rate refi can lower your payments.
Think mortgage interest rates are high? Take a look at your credit card…or your car loan.
If you bought your home a few years ago at a great rate, refinancing your home loan now, when rates are in the 6%’s, may seem like a crazy idea. But the big picture of ALL of your debt (credit cards, car payments, etc), might make a cash-out refi something to consider. Mark and the team are ready to talk numbers with you and see if it’s the right move to get your debt under control and improve your monthly cash flow.
Don’t sweat. Equity works for you.
The equity that you have in your home is one of the best tools you can employ to help improve your financial position and help make or save more money. Even if you have a great mortgage rate now, you need to look at your entire financial picture, i.e. ALL of your debts, the interest rates on those debts, and how much they impact cash flow. When you combine it all, what’s the average cost of interest on EVERYTHING (your blended debt), and is it higher or lower than the current interest rate on a refinance?
The average credit card rate is 24.59%. (source: lending tree). The average car loan rate is 7.03% (source: nerdwallet)
Every $10,000 on a 30-year mortgage loan at interest rates in the mid 6%’s (like what we have right now) results in a change on your payment of about $65/month.
But $10,000 on a credit card at 24.59% will have a minimum payment of about $214/month and will take you nearly 15 years to pay off. $10,000 on a car loan at 7.0% will have a minimum payment, assuming a 5-year term, of $198.
It’s not crazy. It’s math.
Here’s the math we did for a recent client. He owed $98,000 in consumer debt (car, credit cards, personal loans), with a blended cost of borrowing money of 19.145%.
We put together a mortgage refinance for him that chopped his blended cost of borrowing money down to 6.5% (a reduction of 66%) AND improved his cash flow by $2,067/month.
He previously had a lower 3.5% interest rate on his home which helped him to build equity. And that equity was the tool that we used to help him right-size his budget. Taking that extra $2,000/month and applying it towards the principal allows him to shorten his mortgage term from 30 years to about 14 years.
Call Mark to crunch your numbers.
Schedule a free 15-minute chat with Mark.