Follow Patrick Linkedin Facebook
Email Patrick Email
Financial
Jun 16, 2017

Three Reasons Refinancing Makes Sense

Sponsored Content provided by Patrick Stoy - Mortgage Consultant/Owner, Market Consulting Mortgage

With interest rates still hovering at historic lows and the threat of a number of potential rate hikes looming ominously on the horizon, it could make dollars and sense to do a refinance right now. 

Though traditional wisdom might say it is only a good idea to refinance in a situation in which it is possible to reduce the interest rate by at least two points, there are many other times when refinancing a mortgage could be a sound financial strategy:

  • Change in personal situation, finances and/or employment. If your job or personal situation has undergone a significant change recently, it could be a good time to refinance. Being able to prove you can afford to allocate more of your income to housing each month could allow you to get a loan with a much lower interest rate. In a case where it suddenly becomes possible to spend more on housing each month, another good strategy could be to attack more of the principal with a 15- or 20-year loan. An uptick in a credit score could be a good signal it’s time to refinance in favor of a loan with better terms. This often corresponds with a positive change to an individual’s job or personal situation, but it could be the result of paying off a car loan, credit card or student loan. It could also result from simply making enough payments on time.
  • Avoid PMI/the long ARM of the banks. Private Mortgage Insurance, or PMI, is a fee that safeguards lenders from borrower defaults. In most cases, mortgage insurance comes into play when a borrower can’t afford to put down 20 percent. Since it’s a monthly premium based on the amount of money that was originally financed, which does not reduce the principal or help the borrower in any way, it should be avoided at all costs, even if the only way to do so is to refinance in favor of a slightly higher interest rate. An Adjustable Rate Mortgage, or ARM, is a loan with an interest rate that can increase over previously specified periods of time. When the interest rate jumps, payments can increase substantially. Refinancing a loan to avoid a rising interest rate associated with an ARM is a common practice.
  • Tap into the equity pot of gold. Chances are good, if you are a home owner, there have been lots of invitations to refinance in the mail lately. When the real estate market is rapidly appreciating, equity can seem to appear out of nowhere. Chasing the leprechaun is not without its risks, fees or closing costs, however, and a cash-out refinance should never be thought of as free money. But refinancing a loan to gain access to accumulated equity can be an effective, solid means of achieving some important financial goals, such as a home renovation, the elimination of credit card debt, or the funding of a child’s college education, because the interest rates are often lower than most other options.
The decision-making process with refinancing a loan can be extremely complex, as there are many differing factors that come into play, and all of these can vary significantly based on your financial situation or goals for the future. Check out the articles linked here, what to know about home equity loans, and strategies for saving money when refinancing, or give me a call at the number below for a comprehensive discussion about your options. 

Patrick Stoy (NMLS Numbers 39527 and 39166) has 18 years of mortgage lending experience. Patrick is CEO of Wilmington-based Market Consulting Mortgage, which he started in 2005 with a mission to build lifelong customer relationships by providing real value. To learn more about Marketing Consulting Mortgage, visit www.macmtg.com. Patrick can be reached at [email protected] or 910-509-7105.

 

Other Posts from Patrick Stoy

Mcm 14jan insight
Ico insights

INSIGHTS

SPONSORS' CONTENT
Jim ellis headshot 10311631058

Questions to Ask Before Choosing a Digital Agency

Jim Ellis - Signal
Billhunter300x300 b&w

Old School - The Hidden Value of Handwritten Notes

Bill Hunter - Wilmington Design Company
Headshot2

Supply Chain Education and the State of the Industry

Dani Somers - North Carolina Wesleyan

Trending News

Entrepreneur Richard Johnson's Latest Project Aims To Boost Burgaw

Johanna Cano - Jun 14, 2019

New Hanover Regional Grows To A $1.2B Operation

Vicky Janowski - Jun 14, 2019

Plastics Molding Manufacturer Gets Its Start In Wilmington

Christina Haley O'Neal - Jun 14, 2019

Field Of Vision

Jenny Callison - Jun 14, 2019

In The Current Issue

MADE: Production Capacity

From power cords to nuclear fuel, manufacturing companies across the Cape Fear region are making a wide range of products. Here’s a recap of...


Building Efforts To Attract Workers

With demand running high for construction industry workers, officials with area training programs and companies are looking for ways to attr...


First Carolina To Open Full-service Branch

First Carolina Bank, which has maintained a loan production office in Wilmington since September 2017, will open a full-service branch here....

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`
Transporting the Future - Power Breakfast 3.12.2019
Health Care Heroes 2018