WHEN TO REFINANCE – RULE OF THUMB MYTHS
You’ve probably found yourself at one time or another wondering whether it was a good time or not to refinance the house. You figure, “you can consolidate some bills, free up some monthly cash, maybe take some cash out…you know…to fix up the house…possibly get that new flat screen TV you’ve been talking about…and then maybe take a vacation with what’s left,” Marcel Garcia the CEO of 818 Mortgage explains. Sounds good. It helps the economy, and hopefully it helps you too.
Like many people, you have probably heard of, or hold to, a rule of thumb regarding when to refinance that appears to have served others, or even yourself, well. I say “appears” precisely because things are not always what they appear to be. And when it comes to when to refinance rules of thumb, you must beware of simplistic rules. A refinance is likely the LARGEST financial transaction you may ever make and two of the most widely used rules of thumb don’t consider the big picture. Simple is great, except when it’s SIMPLY WRONG.
When To Refinance Rule Of Thumb Myth #1
So what are these two when to refinance rule of thumb myths. And how is it they can appear to be giving you a good deal. While in many cases actually costing you thousands? Well the first myth is what many people call the 2% Rule. This rule states that you should never refinance into a mortgage that doesn’t reduce your interest rate by at least 2%.
And if you can refinance into a mortgage with a 2% or greater decrease in interest rate. Then the monthly savings will add up to long term savings over the life of the new loan. “In some cases this can be true and in many others it is not,” Marcel Garcia explains. The problem with this rule, as you will see shortly, is that it is blind to all other loan factors besides rate. Let’s take a look at some actual figures and put this rule to the test.
“In most cases, an interest that is even 1% lower can help you save money. In Southern California, 1% usually means monthly savings of at least $500. Who doesn’t want an extra $500 every month?” Marcel Garcia asks.
“The first step to home ownership is by speaking to a qualified local loan officer,” call Marcel Garcia at 818 Mortgage for a free one-on-one consultation.
Company Name: 818 Mortgage (AKA: 818Mortgage)
Contact Name: Marcel Garcia
States: California, Arizona, Colorado, Florida, Idaho, Illinois, Montana, Nebraska, Oklahoma, Oregon, Tennessee, Texas, Utah, and Washington
Clients: First Time Buyer who need Pre-Approval for a Home Loan. Home owners who are interested in: Refinance, Cash-Out, HELOC (Home Equity Line of Credit), DSCR (investment property loan) and Reverse Mortgage.
Loan Programs: All traditional Home Loans / Qualifying Mortgages (QM), Conventional and FHA. As well as Non-QM: Stated, Bank Statement, P&L, CPA Letter, Business Bank Statement, and Hard Money Loans.