At the time, it was indistinguishable as a moment I would recognize down the line. After being down the line, I knew exactly what that moment meant.
Some of the questions that we get asked as folks working in the Real Estate Industry seem rudimentary... at least to us.
"Should I refinance" is a question I get often. Personally, I'd love to answer with a resounding, "YES!" each and every time. But I can't. It's just not the way it works. For eight years now, I've heard a bunch of folks answer that question in different markets, with different motives, with different companies... and I'm sure with different results in whether their particular client benefited from it and how much?
Here's my bullet points on that very question:
- This is an easy one but how long do you plan on owning that abode you want to refinance? To me, that's as crucial a part of the application process as asking what debts you have and what your social security number is. By the way, I better get your immediate contact info too;) Why? You got the chance to consult me and I want at least, the chance, to consult you before you disappear.
- Ideally, what are you looking to accomplish? Do you want to save money and/or consolidate debt, broaden the array of Investors holding your Real Estate Portfolio, lower your interest rate, shorten your term, or skip a month's mortgage payment because you are buying time? All are good reasons but the last. The last is simply wasting equity... and time. *1A
- If you can get a rate that is fixed in the four percent range (higher or lower 4% range) at a decent cost... one to two points at least... then you know something I don't. Is it worth that cost? See question number one. If it is long-term (let's say 5-years plus) then you might want to jump as long as you have a lending source who is good with the vertical leap. *1B
(If I'm boring you to death with this interview of sorts, let's spice it up a bit. How's the weather? You look like you've lost a heck of a lot of weight from when this photo was taken on your Driver's License? Do you like David Bowie?)
- Back to the bullet points, here. It's tough times, in the Media & the Reality of it all. But let's say I'm a 45 year-old man who has 15 years left on his mortgage. Let's also say that I can refinance into a 10-year term and keep the same or a very similar, payment. Should I do it? If that's the situation, I think you should. As long as your cash-flow and reserves (liquid assets) are in good order, you'll save a bundle of money in interest along the way. And having a home that is paid off by the time you are 55 years of age is rarely a bad thing.
- I'm a Real Estate Investor and right now I don't have a whole lot of cash, yet I have a whole lot of Resume. Do you have a branch that actually considers Common Sense Lending? To keep this simple, "No." I've thought about this and spoke about it with many individuals... opening up credit to legit Real Estate Investors may be a core stimulus in getting this rock rolling. Hang on and talk to your lender of choice regularly.
(I promise the torture is ending soon)
* "I think of myself as a smart consumer, what does my credit score mean now?" Rule your Credit Score. If you are affording it, keep on keeping records of affording it. It's like a GPA, doesn't mean much unless you know the system... or at least already mastered it. The system loves a good GPA and a good Credit Score. It means everything, right now.
* "I hear of the President's Plan, and I want that rate (whatever it was/is) for my Mortgage. I'm seeing this one a lot. Let me first say that I'm as bipartisian (hate that term, as there should be more than two;) as they come. I have no my political agenda. That written, please quit even wanting to rely on the government for anything. Rates are what they are. Seriously, if you can get a fixed rate in the 4% to 5% range on a 30-year mortgage... you won. Trust me on that one. Wait and opt for a better deal if you choose to roll the dice. Personally, I've never been successful in Atlantic City and have never been to Vegas.
Act Now; Think Later;)
1A - I'll write about loan modifications down the road. Unfortunately, they seem a necessity at certain points in the current atmosphere.
1B - I'm 6'1" and can't dunk a basketball at this moment in time. A tennis ball is eye candy, though;)
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The first thing that comes to mind is that we need to set up a basketball hoop in the back of the house. The way you make it sound, I have a good chance of kicking your ass ;-)
I would like to add that in todays lending environment, homeowners need to ask this question BEFORE putting their home on the market. That 90 day rule still bothers me in that it doesn't allow people the option to take their home off the market in the event that refinancing becomes the better option over selling. HAVE THIS CONVERSATION WITH YOUR FAVORITE MORTGAGE PERSON FIRST!
Great writing, as always!