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What are the benefits of refinancing?
It could be a good idea for homeowners who:
1. Want to get out of a higher interest loan to take advantages of lower rates, lowering their monthly payments.
2.Want to draw on the equity built up on their house to get cash for a major purchase, or pay off high-interest debts.
3. Have an adjustable rate mortgage (ARM) and want to convert to a fixed rate loan.
4. Want to build equity more quickly by converting to a shorter term loan.
5. Want to convert from a 15 year loan to 30 years to lower their monthly payments.
A popular option is the “cash out refinance”, when you make a small increase in your loan amount and get money out as cash. Using this cash to pay higher interest debt (like credit cards) could be a smart move: not only would you be saving a lot of money on interest payments, but your interest payments now are tax deductible. An individual is allowed to take out $100,000 from their principal residence in addition to the original debt used to buy the home, and deduct the interest charged before it is repaid.
Here’s real life example of cash out refinance:
Estimated value of the house: $300,000.00
Mortgage balance: $205,926.47 (int. rate 7.65%, variable)
| Before Refinancing: | Refinancing: | |||
| Option 1 | Option 2 | Option 3 | ||
| Down Payment: | 0.0 | 20% | 10% | 15% |
| Interest rate: | 7.65% var. | 5.875% fixed | 6% fixed | 6% fixed |
| Monthly payments: | $1,475.79 | $1,419.69 | $1,618.79 | $1,528.85 |
| Homeowner’s Insurance: | $134.50 | $134.50 | $134.50 | $134.50 |
| Taxes | $276.16 | $276.16 | $276.16 | $276.16 |
| PMI | $173.33 | 0.0 | $147.00 | $107.00 |
| Total Monthly Payment: | $2,060.0 | $1,830.35 | $2,176.95 | $2,047.01 |
| Mo. Payment Difference: | -$229.65 | +$116.95 | -$13.00 | |
| Cash Out: | $14,146.86 | $43,465.36 | $28,732.86 | |
Our clients selected Option 1, enjoying lower monthly payments, $14,146.86 cash out, lower fixed interest rate, plus no mortgage payments for 2 months after refinancing (saving an additional $4,120.00!)
What are the benefits to you of refinancing with us?
You go to your bank and you may get a great deal. But is it the best you can get? Banks can offer you their retail products, matching you with the best they can offer.
We find for you programs from many banks (including your bank) with wholesale rates, finding what is best for your conditions in the market, not just one bank. So, we could have a better product for you, even from the same bank! Here's what we say: -If you have a “good offer”, let us take a look at it, and we’ll make it better for you!
For a free, no obligation discussion of your particular options, call (786) 419-0490 or contact us here by e-mail.
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