Solano Real Estate Scene: Should I refinance or shouldn’t I?
You have a mortgage balance of only $270,000. You have 25 years left on your loan and have a fixed rate of only 3.875 percent. You plan to live in this home until they wheel you out.
You like your home and are happy with your neighborhood. Your home is worth $500,000. You are 50 years old and planning to work another 12 to 15 years. You have $250,000 in your 401(k) plan but very little money in after-tax checking and savings cash reserves.
Your adult children owe you tens of thousands of dollars but you are not holding your breath. You need or want $110,000 to completely remodel your home and put in a modest swimming pool for the grandchildren; or you have $90,000 worth of credit card, personal loan and auto loan debt, and your roof needs to be replaced because it will barely make it through one more winter.
Should you get a fixed-rate second mortgage, a home equity line of credit or refinance your first mortgage loan into a new 15-, 20- or 30-year fixed-rate loan at a higher rate than your current 3.875 percent?
All of these options will give you the $110,000 you need, so the question is which one is best?
An experienced professional and ethical loan officer will determine which is best. A great loan officer will give you the same advice she would give her own mother or sister. An inexperienced call center loan officer out of Texas, Michigan or Florida might give you the right advice if you are lucky, but lucky is the key word.
The bottom line is the number of factors that go into this mathematic equation is numerous to say the least.
Credit scores, future income potential, retirement and pension outlook, personal financial goals, the blended rate between the rate on your first and proposed second mortgage, the payment difference between the two options, the risk associated with an adjustable-rate home equity line of credit, the rate and cost available for a new fixed-rate refinance and the speed in which you need the dough are just some of the factors.
Should I pay off this $90,000 worth of debt and convert it from unsecured and auto loan debt to a loan secured by my beloved house, or just borrow another $20,000 on a credit card to pay for my roof?
I would have to write another 200 run-on sentences to go over the hundreds of variables associated with these questions. The bottom line is it costs nothing to have your personal situation analyzed by a pro. Every person has different challenges and different goals and a great debt manager is often just as important as having a great asset manager.
Call someone you trust and invest the time to go deep into your options; it takes a professional and experienced mortgage banker a few hours to review all the facts, the credit report, your goals and your financial statement to give you the same advice he would give his mom or sister.