Put Your Home Equity to Work for You

Just about all measures suggest that home values have appreciated by a great deal. Estimates are for gains of 20-30% in home equity. 
 That's a lot of wealth that could be used to consolidate debt!
Proper use of debt consolidation could cut many years off the term of your mortgage, increase cash flow, and build a huge amount of equity to be used in the future. This is possible even if the interest rate on a new mortgage loan is higher than the current rate on your existing mortgage.
Now is the time for us to talk so we can evaluate what the possibilities are for you to tap into that equity and utilize it to reduce your debts and consolidate them – and perhaps even save many years of mortgage payments.
 Give me a call today and let’s discuss your situation!

Refinance Ahead of Predicted Rate Increases

Interest rates have reached their highest level in six months. As the Fed have begun tapering their purchase of mortgage bonds, rates are likely to continue rising in the next few months

Basically, this means if you're still on the fence about refinancing, it's time to get moving!

Rates are still reasonably low— lower than they were before the pandemic, so refinancing remains a historically good deal.

Give us a call and let's review your situation to see if you could benefit from a refinancing before rates move more.


Buyer Pushback and Sitting on the Sidelines

In the last month the housing market went from being red-hot to a normalized market. Although we are still seeing a shortage of housing, we are not seeing escalated offers, and there is more opportunity to negotiate. Last week we even saw a contract where a seller paid the buyers closing costs. (Crazy, I know) The housing market is starting to reflect that buyers are beginning to pushback. It is kind of like how do you cure rising home prices? You keep raising prices until buyers say, ‘No thank you.’ Now does this mean home prices are going to fall? We don’t think so. Although things are slowing down, it doesn’t mean the housing market is going to go down. There’s a big difference between decelerating appreciation and depreciation of homes. We’re not looking at home prices declining, we believe we are looking at the rate of appreciation decelerating. The rapid rise of home prices has been a struggle. It has forced many people out of the home buying market, and we have seen many more people sitting on the sideline wanting to buy a house but shocked at how much home prices continue to up. Parallel to the purchase market there is a shortage of rental properties. People looking to rent are not only battling to a find a house but if they do rents have escalated so high, they are battling to afford it. One family we are working with is being forced to move out by their landlord who wants to sell their rental property. They are at a crossroads between choosing to buy or rent. Of course they want to own, but they want to own at the home prices of 2 years ago. Although they qualify to purchase a home they are having a hard time pulling the trigger at these prices. At the same time they are having hard time finding a rental due to so few rental houses available and rent prices being so much higher than what they are currently paying. Another family I know owns their house but is in desperate need of more space. With a growing family they have exceeded their current living space and their home no longer fits their needs. They are debating if they should buy a home at today’s higher prices or wait to purchase and see if market goes down. (All while continuing to be inconvenienced in their home which is too small for them.) It is true that we don’t know what will happen to home prices in the future. But it is also true that we don’t know what rates will do in the future and whether a rise in interest rates will affect home prices. While I don’t believe that we are in a housing bubble and that home prices will decline but if they did, I believe the most likely cause would be from rising interest rates. Will either of these families really win by waiting to purchase? Well one of two things could happen. If home prices go down and interest rates go up their monthly payment will be higher. If home prices move up and interest rates move higher then their monthly payment will definitely go up. Let’s look at this from a number’s standpoint. If someone were to buy and finance a house for $500,000 with a 2.875% rate their principal and interest payment would be $2,075. Now let’s say interest rates go up to 3.5%, (because we all know they won’t stay low forever), and we assume home prices fall by $30,000. If they finance a home for $470,000 at a 3.5% rate, now their new monthly payment would be $2,110. If they wait and this occurs good for them, they bought a house for $30,000 lower by waiting. However, their monthly payment went up $35 a month because interest rates went up. If they wait and get lucky, they don’t really win because affordability is the pretty much the same since their payment is higher. Worst-case scenario prices AND interest rates go up it’ll be a lose/lose because they’ll have to pay more for their house with a higher interest rate. Now is not the time to be sitting on the fence. Take advantage of the current market while it is still available to you. If you rent and can afford to own, you need to purchase now. Interest rates are still great, so if you plan to live in a house for more than 5 years it makes sense to purchase now instead of continuing to rent. If you own a house and haven’t refinanced yet you need to. If you own and you want to upgrade your home, there is no reason not to do it now. If you wait and prices go up you are going to spend more and if you wait and home prices go down and interest rates go up, you are going to spend more.

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.

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.

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.

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**


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.

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.

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!