In today’s ever-evolving financial landscape, staying one step ahead is essential. With mortgage rates rising, there’s no better time to take charge of your home financing.
The path to financial empowerment begins right here, and it’s a thrilling journey that promises not only to save you money but also to set you on a course toward your dream of financial freedom. Today’s featured exploration unveils six mortgage refinancing opportunities in the midst of high interest rates that will leave you on the edge of your seat. These opportunities are not just about rates; they’re about seizing the moment and transforming your mortgage into a powerful tool for building wealth and security. In January 2021, many individuals locked in five-year fixed mortgages at incredibly low rates, like 1.23 percent. But today, if you want to refinance that mortgage, it can cost you as much as 6 percent. So, choosing the proper method is crucial if you’re without a line of credit and want to access extra cash using your home’s value.
Let's explore six options to help you make the best choice
1. Break your mortgage and refinance:
- Consider other options if you have much time left on your first mortgage rate.
- Breaking your mortgage early may incur extra interest plus penalties, especially if you have a sizable mortgage balance.
- A better choice might be keeping your low-rate first mortgage and adding a second one.
2. Blend and increase:
- Blend-and-increase combines your old mortgage rate with a new one.
- Ensure there are no hidden penalties, as some lenders may charge penalties but call it a penalty-free blend.
- Note that if your mortgage is default-insured, you generally can’t blend to refinance.
3. Add a new portion to an existing mortgage:
- Some lenders allow you to add new mortgage portions to your existing one, often in the 6% range.
- This is especially beneficial if you have a re-advanceable mortgage or a combined loan plan (CLP).
4. A prime HELOC in the second position:
- Some lenders offer HELOCs behind other lenders’ first mortgages.
- However, most mortgage contracts require you to seek permission before adding a HELOC or second mortgage behind your first mortgage.
5. Second mortgage:
- Breaking low-rate existing mortgages is often costly, so more people opt for second mortgages.
- Interest rates on second mortgages can be around 10% or more, depending on your qualifications.
- Approval is easier as long as you have enough equity and a marketable home, with some lenders not requiring income proof.
6. A non-prime HELOC in the second position:
- If you can’t qualify for a prime lender’s HELOC, consider non-prime options with up rates.
- Expect to pay around 2% in setup fees.
- These lenders are more flexible on debt servicing and don’t worry much about the loan’s purpose.
- They also offer renewal options, making them a viable alternative to private mortgages.
Finding the Right Plan
To pick the best way to get money from your home, you need to think about questions like:
- Are you financially well-prepared? (Having a credit score above 720, being able to prove your income, and keeping your debts manageable gives you more choices.)
- How much money do you need compared to your home’s worth? (If you’re not in the best financial shape, be ready to pay extra, especially if you want to borrow more than 65% of your home’s value.)
- What choices does your current lender provide?
- Where is your home, and what type is it?
The Bottom Line
In the face of rising interest rates, these mortgage refinancing opportunities can be your compass to navigate the financial landscape. With these six dynamic mortgage refinancing opportunities at your disposal, you have the power to unlock your savings potential and secure your financial future. Don’t wait for the perfect moment; create it! Today, decide to take control of your finances, leverage these exciting options, and turn the tables on rising rates. Your financial success is within reach, and by exploring these refinancing opportunities, you’re poised to thrive in any economic climate. If you have any questions or concerns about refinancing or other mortgage-related matters, don’t hesitate to contact our team of experienced mortgage agents at Pegasus. We are here to provide continuous assistance and guidance throughout your mortgage journey.