Volume 18 | June 2020
Friends,
 
Once again, hoping you and your family are safe and well!
 
This week I thought I would share with you a little deeper look at whether refinancing might make sense so with that in mind, here are some mortgage facts you can rely on.

Should I Refinance?   I am often asked, “Should I refinance?” “Does it make sense?” And my answer is often “It depends."

To me it is, in part, a simple math question coupled with some additional considerations based on your own personal circumstances. For example, you will want to consider how long you may stay in the home or if you want, or need, some cash out but it all starts with the math.
 
Here is a little formula that might help you get the answers you need;
 
Current Loan Balance: $_____________________  x current annual interest rate of _____% = $_______________ annual cost of interest (line 1)
 
Current Loan Balance:$______________________ x new annual interest rate of _____% = $________________ annual cost of interest (line 2)
 
Difference between line 1 and line 2 = _____________________ (annual interest savings in year one after refinance and this figure will be very similar for years 2 and 3 with the savings decreasing slightly as balance decreases.
 
Closing costs associated with obtaining the refinance = $______________________________
 
If annual interest rate savings cover the costs associated with the refinance in a year or two or even a little longer it may be worth refinancing, it all depends on how long you plan to keep the new loan.
 
Example;
 
Current Loan Balance: $400,000  x current annual interest rate of 4.00% = $16,000 annual cost (line 1)
 
Current Loan Balance:$400,000 x new annual interest rate of 3.125% = $12,500 annual cost (line 2)
 
Difference between line 1 and line 2 = $3500 (interest savings in year one after refinance and this figure will likely be very similar for years 2 and 3 with the savings decreasing slightly as balance decreases).
 
Closing costs associated with obtaining the Refinance = $3500
 
You can see in this example that you “break even” after approximately 12 months so if you are likely to keep this home and/or loan for a year or longer it may make good sense to consider refinancing.
 
E-mail me with your questions and I will be happy to provide answers as to whether refinancing makes sense for you!


BWA Status : We are still very busy but going strong and looking forward to hearing from you!
  
Mortgage Rates :  Rates were virtually unchanged this last week BUT as the week wrapped up there were indicators of a slight dip coming so be on the lookout this next week for perhaps a little dip. This week the Freddie Mac weekly report showed the average 30 year fixed rate (for loans up to $510,400) at 3.21 + .90 points and with 15 year rates at 2.62%, just amazing!  These rates still remain the lowest rates I have ever offered in my 30+ year mortgage career!
For a snapshot of the history of 30 year fixed rate mortgages going all the way back to 1971, click below!
Cash Out Refinance:   Cash out loans are still available.  Email or call me for strategies whatever your circumstances. 
 
Forbearance:   No new news on the forbearance front except to say I have several clients who were in forbearance and are now refinancing. Let me know if I can help you with any forbearance questions.  


Reverse Mortgages: Week 2 of Reverse Mortgages Answers to Reverse Mortgage Questions.
 
Question: What is the average age of a Reverse Mortgage Borrower?
 
Answer: 72 years of age
 
Question: What determines how much I can borrow on a Reverse Mortgage?
 
Answer: There are three main factors.
(1) Your age (the older you are, the more you can borrow!)
(2) The value of your home (the higher the value the more you can likely borrow)
(3) The interest rates at the time you take your Reverse Mortgage (the lower the rate the more you can borrow)
 
Question: Is the money I receive on a Reverse Mortgage taxable?
 
Answer: The short answer is NO, the proceeds are not taxable. Reverse Mortgage payments and proceeds are considered loan proceeds and are not income. Of course you will always want to discuss tax questions with your tax professional. 


If you are curious about Reverse Mortgage facts, please call or e-mail me. Additionally, we have put together a short, easy to read, online booklet that dispels some of the old myths about Reverse Mortgages and more importantly provides some answers for those seeking clarity. Click here to view our helpful booklet https://www.bwamortgage.com/reverse-guide/.


I will keep you posted as I learn more and of course, if you need anything, please call or email me! Take care and stay well!
Floyd Walters
818-952-2726

707 Foothill Blvd, Suite #202,
La Canada Flintridge, California 91011
NMLS# 334184