Refinancing your mortgage to cover other expenses
Refinancing your home to leverage its equity can be a helpful step in your long-term financial plan. It gives you the convenience of one regular payment, along with low interest rates that help you save money over time. People refinance their mortgages for a lot of reasons, and if it’s something you’re considering, our team of lending specialists offer these three tips:
1. Choose an amortization schedule that matches your goals
There are a lot of decisions to make when you refinance. One important choice is whether or not to renegotiate your amortization schedule to reduce cost and extend the payoff date.
When it comes to consolidating debt, our goal is to help you stay on track with your financial plan. Often this means we’ll recommend a loan over refinancing your mortgage, which might help you pay off the debt sooner. However, if you’ve made the decision to refinance your mortgage, we suggest keeping your current amortization schedule so you don’t interfere with your mortgage payoff date. Either way, you’ll end up further ahead in the long run.
If you’re working on home renovations, extending your amortization schedule might make more sense. You’ll benefit from lower monthly payments and, if your renovation adds substantial value, you’ll offset the additional expenses that extending your payoff date can bring.
2. Invest in renovations that add value
Some renovations contribute more to the value of your home than others. While a new foyer might create a good first impression, kitchens and bathrooms can add tens of thousands to your home’s listing price when you sell. Consider discussing your plan with a realtor or home appraiser to ensure you are creating financial value with your renovations.
If your home doesn’t have enough equity to fund your project, SCU can work with you to offer financing based on your home’s new, “as completed” value.
3. Tap into equity to boost the down payment on your next home
If your plans include buying or building your next home, tapping into your existing equity can increase the funds you have available for your down payment. In addition to avoiding the extra costs that come with a lower down payment, you can also reduce your overall monthly expenses.
When you talk with an SCU lending specialist, we will work with you to discover the best options that save you money and help you achieve your goals. This might include blending rates between your existing and current rates, or switching your variable rate mortgage to a fixed rate. SCU’s mortgage refinances are completed in-house, which means you can have cash-in-hand quickly.