San Diego Refinance

San Diego Mortgage RefinanceSan Diego Mortgage | When You Should Refi

IMPORTANT: Never rush to Refinance a San Diego Mortgage… The State of California is a “Non-Recourse” State.  Meaning, when a mortgage is used to Buy real estate, those mortgages have zero personal liability for the Borrower.  In the event of a Short Sale or Foreclosure, the Bank can only come after You for any shortages if they have “Recourse”.  HOWEVER, once You Refinance those loans, even if it’s just for a lower rate and payment, the loan(s) will now have Recourse. So, when refinancing, it’s important to know what additional liability You’re assuming and weighing everything in Your decision.

There are several reasons You might be considering a Refinance: Lower the rate and payment, Get Cash out, Consolidate debts, or to Re-Strategize.  If You are refinancing for a reason that is different than the ones listed here, please email me below so we can have a very important conversation.

When is it OK to Refinance just to lower the rate and payment on our San Diego Mortgage?
#1. Do NOT believe the Myth, “Only refinance if You can drop 1%…”
By the way, what idiot came up with that?  They clearly had little knowledge for the concept of Math.  If Your loan is for $100,000, then You might not want to refinance even if You can lower the rate by 3%.  Contrarily, if Your loan is for $2,300,000, then saving 1/4% might save You a TON.

#2. Weighing the Current Total Cost to the Proposed Total Cost.
Many times, when someone is doing a Refinance, it becomes very tempting to start the Mortgage all over again at 30 years.  However, this could actually cost You money!  Take the amount of Your payment times the number of payments left and that will give You the Current Total Cost to own Your home.  Now, take the new 30 year fixed payment times 360 and see what that number is… Never refinance for a higher Total Cost!

#3. The no-brainer San Diego Refinance.
Let’s say You have 27 years left on Your loan.  After running the numbers, You have the option to refinance for a new 25 year loan that has a lower payment.  This is truly a win/win.  You are able to shorten the loan and reduce Your monthly payment.  There is no drawback assuming You are able to do it with very little or No Closing Costs.  If You are ever able to do this, jump all over it.  No question it will save You money and probably save You a Ton of money!

When is it smart to take Cash-Out with a Refinance Mortgage in San Diego?
#1. You need the money to diversify Your investments.
For example, You have $100,000 equity in Your home, but only $14,000 in a 401k and very little in Your savings account or any other investments.  This is a BAD situation.  Just ask anyone who had $200,000 of their equity evaporate in minutes during the Housing Crash.  Evaluate just how much, on a percentage basis, the equity in Your home represents in Your portfolio.  If You need to take cash out to rebalance, it’s a very wise move. This is one of the reasons I have no licensing at all.  Did You know that a Realtor or Financial Adviser could not tell You that?  It’s considered to be unethical…Unbelievable.

#2. You want/need to make improvements to the property.  Use the Home’s equity for these kind of improvements instead of Your savings.  Try to look at the Home, not just as the place where You live, but as it’s own little business.  Of course, this is a business that You have to invest in every month, but You also get to live there, so let that wash-out.  Any time You are doing something with the Home, be very careful about how much You are putting in it vs. what You will get out of that particular improvement.  A lot of people upgrade their kitchens, put in travertine flooring, install a Spa or Pool and then think, “we put a $40,000 pool in, so the house must be worth $40,000 more…” Wrong.  You have to figure out what the Home will be worth AFTER You make the improvements.  Decide whether You should do it based on what it will actually COST You.  In other words, if Your home will be worth $15,000 more, but it will cost You $40,000 to put in the pool You want, then ask Yourself “Are we willing to spend $25,000 to have a pool?”

When would it be wise to use a new Mortgage to Consolidate debts?
Only when it’s to consolidate multiple mortgages, there are Big monthly and long-term savings, and You are totally committed to staying in the Home for a very long period of time. (10+ years)  You should NEVER refinance a San Diego Mortgage to consolidate debts, especially unsecured debts like Credit Cards. Remember this old rule of common sense in Finance…Never trade unsecured debt for secured debt.  Credit Cards, signature and personal loans, collections, medical bills, this are all unsecured debts.  If they have become a problem for You financially or mentally, do NOT look to the mortgage for a remedy.  Seek a Free San Diego Bankruptcy consultation immediately.  You can eliminate all those unsecured debts with a Chapter 7 Bankruptcy, which only lasts 100 days.  It’s the most amazing financial tool that exists.

What is a good time to Re-Strategize a San Diego Mortgage?
You can Re-Strategize ANY time.  It’s always a good time to re-strategize Your mortgage if Your goals or priorities have changed.  For example: You have a 20 year mortgage and Your monthly 401k contribution is about $500. You just found out that there is another member of Your family “on-the-way” and it’s time to Re-strategize Your portfolio, Mortgage and debts if any.  In this case, You might want to do a 30 year mortgage to reduce Your REQUIRED monthly payment for the Home.

This way, You can keep putting money in Your 401k, since the Company is matching, and still make the necessary payment that would have Your home paid off in 20 years.  BUT, if having this new addition to the family impacts the Household budget more than anticipated, it’s easy to just make a smaller mortgage payment on the months You need to…  I love re-strategizing.  The sad part is, most people create their mortgage with NO STRATEGY AT ALL.  It’s a sad thing to see, but when You see how much You can do with Your mortgage as a financial tool, it will blow Your mind why no one is ever talking about this!

If You need help with any questions about a Mortgage in San Diego not answered here, I’d love to hear from You.  Just use the form below 🙂

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