Your Mortgage: Even Santa is refinancing

Mike Miles from Fountain Mortgage walks you through the mortgage process.

It’s that time of year again. You’ve rolled out the Christmas tree, hung the stockings up on the fireplace, and, if you’re like me, already started watching holiday classics like Christmas Vacation for the 2000th time.

 It’s also the season of giving and going overboard buying gifts for family and friends, so it’s easy to forget about yourself sometimes. It’s totally understandable to want to treat yourself after the crazy year we’ve had, and refinancing might be the perfect self-gift. That sounds super salesy, and I can practically hear your eye-roll, but hear me out. Simply put, this year has been historically different.

 Refinancing in the twos or low threes used to be difficult to achieve, but that’s just not the reality anymore. If you would’ve asked me a year ago if a 2.5-2.875% average refi rate could become a common trend, I’d probably have looked at you like you had two heads, but 2020, despite all its drudgery, has opened up access to historically low rates in a way we’ve never seen.

 Refinances are the gift that keeps on giving for at least 30, 25, 20, 15 or 10 years depending on which loan term you choose. The gut reaction you may have is that your current mortgage rate can’t be improved upon or that the cost of refinancing is too much, but let’s break that down.

 Did you know that even a slight rate reduction, such as .375 percent, will save you over $20,000 in payments? Did you also know that the typical cost of a refinance is about equal to one month’s worth of a house payment? Did you know that you can skip up to two house payments when you close on a refinance? And did you know you can also roll your closing costs into your new mortgage payment?

 If you answered ‘no’ to all three of those, you may have just realized that you could refinance without any money outside of what you’re already dishing out with your monthly mortgage payment being spent. Basically, you can use the skipped payment period to pay for the cost of the refinance. It’s like a free gift of thousands of dollars in savings.

 Let’s say you actually do have a rate that’s lower than the current market rate, however. What other gifts can you give yourself with a refinance? Here are a few:

  •  Home improvements/additions/renovations
  • Reduction of years on your loan term
  • Debt consolidation (especially unsecured debt)
  • Paying for education instead of accepting burdensome student loans
  • Equity access for the purchase of another property

 Doing a refinance doesn’t always mean your existing loan has to be touched though. Home equity lines of credit are making a comeback and are also a great way to access your valuable equity. You also likely have way more equity in your home than you think, considering how the real estate market has been performing recently.

 One last thought, and I promise I’ll leave you to your eggnog. Doing your refinance at the end of the year is a great way to replenish reserves used during the holiday season, and using the two-month skipped payment period as an opportunity to pay yourself back for all the giving you plan to do is simply a smart approach.

 If that sounds like something you’d be interested in, call or email me at mmiles@fountainmortgage.com today to find out more! Happy holidays, KC!

This weekly Sponsored Column is written by Mike Miles of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain today.

Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268