Today, Albert Gonzales joins us to discuss the mortgage industry and where interest rates are heading.
When the Feds announced a rate increase in mid-December of 2015, they weren't joking around. Currently, 30-year fixed-rate mortgages are around 4%; we expect that to increase to about 4.5% throughout the course of the year. How might this affect you?
If you get a loan amount of $200,000, a .5% increase in interest rates will cost you $60 more a month in payments. This is an overall increased expense in interest to the tune of about $20,000 over the life of the loan. So, as you can see, even a normal jump in rates greatly affects your ability to afford a home.
If you're looking to refinance, there are a few ways to remove your private mortgage insurance. Given the equity you have in the home, you can have an appraisal done or, if you have had first lien and a second lien, you can roll both into one refinance to have only one monthly payment. Another thing to consider is reducing your term from a 30-year mortgage to a 15-year mortgage.
If you have any mortgage questions, don't hesitate to reach out to Albert at (317) 605-3383 or Albert.Gonzalez@Ruoff.com. Of course, if you want to see how much equity you have in your home so you can refinance and lower your monthly payment, give us a call or shoot us an email at any time. We would love to hear from you!
When you pay off your mortgage early, you save thousands of dollars and shorten the term of your loan. It's really a simple process. All you have to do is make extra payments on the principle of the loan. While this is easy enough, it can be hard to understand how paying an extra $100 a month saves you money and shortens the loan.
We have a website called MortgageProfessor.com. We offer a mortgage calculator there. First, enter the current value of your mortgage, the current balance of the mortgage, the interest rate, and how many years are left on the loan. Second, enter how much extra money you can pay each month. The final number will show you how much money you save in interest and how many years you shave off the term of the loan.
For example, you might have a $200,000 house with a 4% interest rate. Paying an extra $100 a month saves you almost $27,000 in interest and knocks five years off the term of the loan!
As you can see, making extra payments on the principle of the loan saves you time and money. If you plan on selling your house in the next 4 to 6 years, you will have built up extra equity for your next home.
If you have any questions, give us a call or send us an email. We would be happy to help you!
