If you’re still paying 6%, 7%, or even 8 ½% interest on your first or second mortgage on your Texas home, you probably wanted to refinance just as soon as you saw mortgage interest rates drop into the 3’s and 4’s. But… if you purchased your home in 2005 or 2006, you were soon disappointed.
Not only was your home not worth what you’d paid – it was worth considerably less than you owed. Add in a second mortgage you may have taken out for remodeling or other improvements, and you were seriously underwater.
That was then. Now the pendulum has swung so far the other way that you may find yourself able to get a new loan without paying for mortgage insurance – because your equity exceeds 20%.
Because Texas has a low foreclosure rate, a small inventory of homes for sale, and a thriving economy, home values have skyrocketed in the past few years. A case in point is the example that MyFoxdwf.com reported recently.
Consumer reporter Steve Noviello interviewed Jimmy Moore, who purchased a Hazlet home in 2006 for $206,000. Going with no money down, he and his wife were paying 6% on a first mortgage and 7.5% on a second mortgage. Then they took out yet another loan in order to build a backyard pool. That rate was at 8.5%
In 2009, when they saw rates drop, they naturally wanted to refinance. But much to their dismay, they learned that even with the addition of the pool, their home had dropped nearly $40,000 in value. It appraised for only $165,000.
Fast forward to 2014… The Moore’s just refinanced their three loans into one, pulled out $25,000 in equity in order to build a new gazebo, and saw their payment drop by $7 per month. They also shaved 7 years off the life of their payments, since they refinanced for 15 years rather than 30.
The home that was valued at $165,000 in 2009 now appraised for $308,000 – and all they’d done was wait it out.
A mortgage loan rate of 4% versus 6% makes a huge difference. In fact, on a $200,000 loan, the difference is more than $240 per month. If you can also eliminate the mortgage insurance, you’ll save even more.
Financial analysts are cautioning that these low rates can’t last, so if you’re paying 6%, 7%, 8%, or more, give us a call at Homewood Mortgage. We’ll be glad to talk over your situation and share what we know about the value of comparable homes. We’ll also be glad to get you prequalified for a loan.
An appraisal costs about $500, and it could save you 5 times that amount in just the first year.
Don’t wait – call the Mike Clover Group at 800-232-7409 today.
18170 Dallas Parkway
Dallas, TX 75287
Apply at: www.mikeclover.com