DID YOU MISS THE OPPORTUNITY TO REFINANCE YOUR HOME WHEN RATES WERE AT ROCK BOTTOM? YOU MAY STILL BE ABLE TO REFINANCE TO IMPROVE CASH FLOW AND YOUR OVERALL FINANCIAL SITUATION!
- While mortgage rates have increased sharply in 2022, home values continue to increase, and you may now have substantial equity that can be accessed to pay off debts
- A cash-out refinance is still a great option to improve your monthly cash flow and overall financial situation
- Even if you have a first mortgage at 2.500% (or lower) you can still benefit from a cash-out refinance to pay off your higher-rate debts, such as installment and automobile loans, student loans, credit cards, etc.
- By paying off other debts and rolling them into a new higher-balance mortgage, even at current interest rates, you can save hundreds of dollars or more per month on your total debt payments, thereby improving your total monthly cash flow
- Consider the following examples which demonstrate the monthly savings:
|LOAN DETAILS||EXAMPLE 1||EXAMPLE 2|
|Representative FICO Credit Score||720||660|
|Current Home Value||$400,000||$400,000|
|Current Mortgage Balance||$200,000||$200,000|
|Current Mortgage Interest Rate *||2.500%||3.375%|
|Current Mortgage Payment (PITI)||$1,021||$1,114|
|Current Total Other Debts Balance||$82,000||$82,000|
|Current Total Other Debt Payments||$2,025||$2,025|
|Current Total Monthly Payments (Total House Payment Plus Debts)||$3,046||$3,139|
|New Mortgage Loan Amount||$300,000||$300,000|
|New Mortgage Interest Rate **||5.250%||5.875%|
|New Other Debt Balances||$0||$0|
|New Mortgage Payment||$1,887||$2,005|
|New Other Debt Payments||$0||$0|
|Cash Back at Closing After Payoff of Current Mortgage and Other Debts||$8,000||$6,000|
|New Total Debt Payment||$1,887||$2,005|
|Total Monthly Savings||$1,159||$1,134|
*Current mortgage interest rates shown are based on the typical interest rate that would have been available to borrowers with similar credit scores and loan profiles during the period of March 2020 through January 2022.
**Proposed new interest rates shown are based on mortgage interest rates for borrowers with similar credit scores and loan profiles published on April 25, 2022. Mortgage interest change daily with the market and are not guaranteed until locked in conjunction with a completed loan application.
Still not sure if a cash-out refinance is right for you? We can answer your questions and help you evaluate your unique financial situation. Contact the Trellis Lending Team today!