Refinancing

Refinance Fee Dropped

Recently the FHFA announced that it would be eliminating the adverse market refinance fee from Fannie Mae and Freddie Mac home loans delivered after August 1st. Originally this fee was designed to cover projected losses from the pandemic. With the fee borrowers were paying an extra $500 for every $100,000 they refinanced. However, the effectiveness of the market warranted "an early conclusion" of the fee. Now couple the fee being gone with the low rates we have been seeing this month and there has never been a better time to refinance. In fact more borrowers than ever can benefit from a mortgage refinance right now! If you have been considering refinancing, now is the time! Give us a call and let's see if you how much you could benefit.
Read more...

Pay Off Your Mortgage Faster With This Strategy

One refinance strategy you might not know about is refinancing to lower your monthly payment but then continuing paying the old payment to pay off your loan faster. This strategy can help you not only pay off your mortgage sooner, but also save you thousands in interest over the life of your loan. A recent client we worked with just used this strategy. We refinanced them into a 30-year loan, saving them $330 a month. By applying what they saved as an extra principal payment each month they will pay off their loan in about 21 years. This means we were able to shave off about 7.5 years of mortgage payments. This will also save them over $120,000 in total interest paid over the life of their loan. This is pretty incredible savings! If you would like me to review your current situation to see if this refinance strategy makes sense for  reach out to a member of our team. We would be happy to run the numbers for you.
Read more...

Is an ARM Right for You?

Adjustable-Rate Mortgages (ARMs) have been making a comeback. Last year, the adjustable-rate mortgages were higher than the 30-year fixed. But lately that’s been changing, and ARMs have been considerably lower than their 30-year fixed counterparts. Adjustable-rate mortgages come in an initial period fixed rate of five years, seven years, and 10 years. We have really been liking the 7-year adjustable-rate mortgages. It gives you a fixed rate period for the first seven years, and after seven years, it will begin to adjust once every six months. The 7-year ARM interest rates have been coming in around 2.306% (APR 4.732%), compared to a 30-year fixed today at 2.875% (APR 2.933%). One example that we looked at recently was a client of ours who was in a really good rate of 3.5% but wanted to save a bit more monthly. He was thinking about refinancing into a 30-year fixed at 2.99%, but the savings just were not enticing to him. He wanted to save a little bit more than what the 2.99% fixed rate would allow, since he was already at 3.5%. On his $500,000 loan amount, the amount of interest paid over seven years at 2.25% is $72,000, compared to a 30-year fixed at 3.5%, which is $114,000. Over the seven years, he is going to pay $42,000 less in interest by refinancing into a 7-year ARM. This client is thinking of having their house for about 5 to 7 years, and then he would like to upgrade into something bigger. This makes the 7-year ARM a great fit for him, because he is not planning on having the house longer than seven years. Sometimes I have clients say, "Well, what if I end up wanting to stay in my house longer?" My answer is you are okay if you stay in an ARM longer than the initial period. The reason why, is you will have paid down the principal amount considerably in the first seven years. Even if the rate goes up for years eight, nine, and 10, you have already paid down the loan quite a bit, so you would be paying a higher interest rate on a smaller loan amount. Furthermore, you just saved $42,000 in interest so even if you start paying more in years eight, nine, and 10, it's going to take a while before you breakeven on that $42,000 savings. If you are nervous, a 10-year ARM is also a great option. If you are not planning on being in your house for very long, maybe you're buying a condo or a townhome, or you're planning on expanding your family, a 5-year ARM has even lower interest rates that is fixed for 5 years. Depending on your situation homeownership duration varies. The average loan in America only lasts 3 to 5 years before homeowners decide to either trade up to a bigger or better home or maybe decide to downsize. In fact, only 10% of loans in America actually make it to year seven. This is another reason why I really like the seven-year ARMs. A lot of the time adjustable-rate mortgages receive a bad rap. It's true that in the 2008 financial crisis there were a lot of bad ARMs out there. They adjusted after just two years and they adjusted quite significantly, which caused many people to lose their homes. Today's ARMs are different, since they are fixed for a five, seven or 10-year period, and the interest rates are considerably low. ARMs are definitely not for everybody, but if you are not planning on keeping your house, or the loan for that matter, for 30 years, if used properly, ARMs are not bad products. The important thing is to understand them.
Read more...

Low Mortgages Rates are Propelling Wave of Cash-Out Refinances

The continuation of favorably low interest rates has propelled a wave of cash-out refinances, the most we have seen since the financial crisis of 2008. Many think this is cause for concern, but its not; at least not yet. Given the rapid growth in the home process in the last year, the share of cash-out refinances isn't terribly high. There were more during earlier housing booms, including the housing crash 15 years ago. A cash-out refinance allows a borrower to swap their current loan for a new one with a higher balance. So, homeowners can pay off their old mortgage and still have cash left over. A recent report found that in 2020 the amount of equity tapped into through cash-out refinances increased by 42%. These days, it appears that most borrowers are using the funds to pay down other debt and to update their homes. Home improvement spending sky-rocketed during the pandemic. Homeowners are sitting on a lot of home equity right now and what a lot of people are doing is taking this money, getting a cash-out refinance, and using the cash to make renovations to their home. Many projects from adding a screened-in porch, updating a bathroom, creating a home gym or adding an official home office all add to overall value of a home. These are smart moves to make as the improvements are actually going to help their home sell for a significantly higher amount of money in a few years. It's important to do home improvements that are low cost but add the biggest value to your home. Interested in looking into the amount of equity you could tap into? Reach out about a cash-out refinance. Whether you are looking to pay off some debt or complete a home remodel, we can help guide you ever step of the way. Call today! 801.206.4343

*Source: Kiplinger Letter: Vol.98, No.10**

Read more...

You Have Nothing to Lose with a Refinance

A recent borrower we worked with bought a townhome 18 months ago with a 4.75% rate. After running the numbers we found that we could refinance to drop her rate down to 2.625% and save her $350 per month. At first she was super hesitant to do the refinance because she was only planning to live in Utah for another 2 years. She was interested in the idea of keeping the property as a rental when she moves out of state but had not fully made up her mind yet. She spent hours running numbers this way and that to work out if refinancing would benefit her long term For me it was a super easy decision because her breakeven point was only 10 months. Meaning that 10 months of saving $350 paid all of her refinance costs. She is definitely staying in Utah for another 2 years so she will save $350 every month after month 10. And if she does decide to keep the property and convert it to a rental down the road she is in a much better position to have cash flow. She had nothing to lose with this refinance and in the long run it saved her thousands. If you are wondering what a refinance could do for you, give me a call. I'd love to price out some scenarios to show you what potential savings a refinance could provide for you.
Read more...

Refinance Today, Save Cash for the Holidays

The holiday season is quickly approaching. Although it is deemed the best time of the year, it can also be the most stressful season when it comes to finances. Whether it be holiday décor, Christmas gifts, or travel plans the end of the year can involve a lot of expenses. Throw in the fact that we are in a pandemic and people’s budgets may be tighter than ever. According to an online survey by the Ascent in 2019 it was reported that the average consumer who bought Christmas gifts spent over $925 and that 21.5% of Americans surveyed went into debt from Christmas. Whether it be through personal loans, maxing out credit card limits, or opening new store cards many Americans do whatever it takes to pay for their holiday. But why put yourself into a debt right at the beginning of a new year, when you could find a better way to get some extra funds this December? A lot of people don’t know that a cash out refinance can be more beneficial than taking out a personal loan or maxing out credit cards. We want to help you by exploring the potential advantages of a cash out refinance on your home. A cash out refinance allows you to pay off your existing mortgage and begin a new loan, just like a traditional refinance. But instead of refinancing for what you currently owe on your mortgage, you refinance for a higher loan amount. You then get the extra amount in the form of a lump-sum payment after your loan closes. Another bonus of a cash out refinance is if interest rates have dropped since you took out your original loan, a cash out refinance could also lower your rate at the same time. Like a recent borrower we worked with who worked for a company that had been hit hard by COVID19. His hours were cut at work, simultaneously lowering the family’s monthly income. They reached out to see if there was a refinance option that could help them lower their mortgage payment to save money monthly. After running the numbers, we decided to move forward with a cash out refinance. We were able to drop their interest rate from 3.75% to 2.75%, saving them $200 a month. However, the best part is that not only did we refinance them to a lower rate and monthly payment ultimately saving them thousands over the life of their mortgage, but they were able to skip 2 months of payments and use that money in other areas of their life, like to check a few more people off their Christmas list. The borrowers were getting by despite their income drop due to COVID, but skipping the two mortgage payments and lowering their monthly payment by $200 is really going to help them out long term and allow them to put together a terrific holiday this year! If you are not sure if a cash out refinance is right for you, reach out! ALV Mortgage can help you explore your options and see what would be best for your individual situation.
Read more...

Smart Refinance Tips During the Pandemic

You may be considering taking advantage of the current historically low interest rates by refinancing your mortgage to lower your monthly payment, consolidate debt, or move to a 15-year term. The Mortgage Industry is doing an excellent job of processing transactions under shelter in place.  But it’s more important than ever to help the process along by being well prepared. Here are a few tips to set you up for a smooth transaction and help you save money more quickly: 1.Continue making regular mortgage payments during the process 2. Do not take on any new debts.
  • -Taking on new debt will alter your debt to income ratio, which plays a major role I your pre-approval. Resist the urge to open a new credit card or upgrade your car,  until your loan transaction is finalized.
3. If your income or employment does change during the process, notify your lender right away.
  • -Changes happen, but you want to be sure to notify your lender so they can make the appropriate updates to your loan
4. Know that the appraiser may have to come into your home, so be prepared for this 5. Lastly and most importantly, quickly respond with all documentation that is being requested of you!
  • the faster we receive your documents the faster we can get your loan processed. If you documents are requested by our team please respond as quickly as possible.
  By following these tips you will set yourself up for a quick and easy refinance. Not sure how a refinance could benefit you? Reach out today to see how much you could be saving!
Read more...

“She Works Hard for the Money”

As the Donna Summer’s song goes, “She works hard for the money.” We want to help you put that money to work for you by exploring the advantages of a cash out refinance on your home. A cash-out refinance may be the key for opening financial doors for you and your family. We have assisted hundreds of clients in putting their equity to work in many ways, including:  
  • Eliminating high interest rate credit cards
  • Finishing a basement, remodeling their home, etc
  • Starting a business without seeking outside lenders and investors
  • Diversifying their investments into such things as stocks, rental properties, etc.
  • Helping with unexpected or major expenses such as medical and education needs
  • Pulling cash out for the purchase of a new primary residence
  I recently closed a loan for a family who had gotten in trouble with their credit cards. The husband had gone on a little shopping spree and neglected to tell his wife that he had opened a few credit cards without her knowledge. Upon the loan application, imagine her shock learning that there was more debt than what she was aware of! This family was in a FHA loan and paying high FHA Mortgage Insurance. Their home had appreciated an astounding $100,000 in the 5 years they had lived here. We decided to complete a cash out refinance and ended up helping them pay off $32,000 in credit cards. We refinanced into a Conventional Loan and removed the FHA Mortgage Insurance. Because we did raise the loan amount, their monthly payment increased, but only by an additional $172 per month. By paying off the $32,000 in credit cards, they saved $1,238 per month in credit card payments. This cash out refinance gave them the freedom they sought by alleviating the heavy debt burden they had been carrying. A family who owned a three-bedroom home with an unfinished basement initially bought the home with two kids, which fit them perfectly. After having their family grow by an additional two kids, they had become completely crammed. We completed a $24,000 cash out refinance, which afforded them the ability to finish their basement, as well as add two additional bedrooms, a bathroom, and a TV room for the kids to do exactly as they pleased with plenty of space to run around. One of our clients, who is a mechanic, had worked for years at large dealerships fixing cars. He decided he was ready to work for himself, so he came to us to complete a cash out refinance for $40,000, which gave him enough to open his dream garage, as well as purchase the lifts and other equipment he needed to be independent. He now works longer hours for himself than before at the dealership, but he followed through with his vision of owning his own business successfully because of his decision to refinance! A client of ours, for whom we did a cash out refinance four months ago, took $120,000 in cash out of his house. He felt that the equity in his home was not working hard enough for him and decided to turn it around by investing. He immediately bought a condo for an investment property and as a result, is now cash flowing $350 per month. He kept half of his cash and is actively looking for another investment property to buy. He is seeking to turn his equity into about $700 in monthly cashflow with additional property, made possible by the services we were able to provide. In 2012, a couple came to us seeking to cash out $50,000 to fund in vitro fertilization treatments and other expenses incurred while trying to expand their family. Having no kids of my own then, I thought they were nuts! I have been blessed not to be in a similar position, but now that I have two children myself, I understand why this was such an important step for them. They have expanded to a happy, healthy family with three children (including a set of twins.) I have been able to stay in touch with them through social media and their decision to refinance is one they would not go back on. They put their equity to work for something that not only helped their future, but assisted with their goals of having a loving family of their very own. In the last 12 months, we have noticed what has become an exponentially growing trend. Many of my clients have sought to purchase a new home by using their equity, keeping their home, while converting it into a rental property as a means of providing future retirement income. This works by pulling the cash out of their current house, then using that as a down payment toward their next purchase. There is only one move here, which eliminates stress about selling their house and trying to buy a new one simultaneously. They utitlize the existing equity to work for the purpose of providing for themselves looking toward the future.. Owning your own home is not just a fundamental aspect of the American Dream. For many American households, the equity in their homes represents as much as 67 percent of their total net worth. For generations, the power of home ownership has created a solid financial base for millions of families, and a little knowledge offers the potential for even more financial independence. We can assist you with the knowledge and expertise to help you not only envision a possible dream, but live it by ensuring money doesn’t stand between you and your lofty goals. You work hard for your money, and we are here to treat you right!    
Read more...