Whoever coined the phrase, “Make hay while the sun shines” was onto something—summer is the absolute best time to tackle those projects (or vacations) you’ve been putting off.
And while there are many valid reasons for delaying said projects, a lack of funds shouldn’t be one. Especially when we’ve come up with 3 sure-fire reasons to act now.
PMI, or Private Mortgage Insurance, is a form of insurance lenders implement to reduce the risk of loss on low down payment mortgages. By removing PMI, you can save hundreds, if not thousands of dollars each year.
However, you must have at least 20% equity in your home to do away with PMI. You can ask your lender to remove the PMI when you’ve paid down the mortgage balance to 80% of the homes original appraised value.
If you aren’t quite at 80%, it might be a good idea to refinance. Not only can you remove the PMI, but you might be able to lower your monthly mortgage payments and still pull out some equity for a project or a much-needed vacation. Score!
Fund Your Remodel
First things first: You must make sure the refinance plus the remodel doesn’t cause your mortgage payment to increase or extend your payments past your existing pay-off schedule. Then and only then should you take to your kitchen cabinets with a jackhammer in hand.
For example, you have $10,000 in mind for your remodel and currently have a 30-year, $200,000 mortgage at a 6% interest five years ago. As it stands, your monthly payment is ~$1,200, (excluding insurance and taxes) with a remaining balance of $186,109.
Here’s where the magic happens—you would take a mortgage out for $196,109 with an interest rate of 2.5% for 25 years, making your new monthly loan payment $982. And voila, you not only pay your home off as scheduled but also save money while doing so.
Say Goodbye to Debt
Debt is completely normal and something that many homeowners accumulate over time but becomes a serious problem if your monthly budget is affected. But fear not, having equity in your home can put you on the right track to becoming financially comfortable again.
Similar to the example above, you can pull out $10,000 to pay off debt while simultaneously lowering your mortgage payment and still pay it off on time. Have significantly more debt? No problem! You can withdraw more money and break even on your mortgage.
No matter the situation, your home equity can do the work for you. Your home is an investment and now is the time to cash in on the rewards of home ownership.
Contact us today to see if a refinance makes sense for you. We can work with you on countless scenarios and find the best solution that works for your situation.