Why You Should NOT WAIT To Refinance Your Mortgage - Refinance Home Mortgage

if you were thinking about refinancing your mortgage make sure you listen up because there are new refinancing fees coming that you do not want to pay so make sure you watch this video until the [Music] end what's up everybody i am just pretty sing from the minoritymindset.com and welcome to the minority mindset refinancing can be a great way to save money on your mortgage if you do it the right way and if you don't get slammed with fees in august 2020 the federal housing finance agency announced that they're going to be tacking on a new half a percent fee on lenders on all mortgage refinances that happened through fannie mae and freddie mac if you were financed after september 1st naturally people were angry and some executives called it a money grab and other financial executives said it was a tax because it was going to make refinancing more expensive for homeowners who just want to save some money surprisingly the federal housing finance agency heard that and they backed off they said okay we're not going to tack on this new half a percent fee yet and then they change the start date from september 1st to december 1st 2020. in simple terms what that means is if you refinance your home after december 1st 2020 your lender might have to pay an additional half percent fee which means you're financing a home might become more expensive for you now for most people refinancing is still going to be the smart move even if you have to pay this additional fee but if you don't have to pay an additional couple grand why do it before i get into what you should do to save money on your refinance i need you to do me a favor and smash that thumbs up button below because the way the youtube algorithm works if you do not smash that thumbs up button then youtube will be much less likely to show you and other people our financial news and education videos i got my new handy dandy whiteboard so let's go over what happens when you refinance your home let's say you bought this home right here in 2010 and it cost you at the time 200 000 so when you go to get a loan you got to put some money down so let's say you put 20 down which is 40 000 that means you took out a loan of a hundred and sixty thousand dollars 2010 interest rates might have been something like 4.8 percent on your mortgage and if you got 160 000 loan at 4.8 percent that means you're going to be paying let me get my red marker for this one oh you're going to be paying 840 a month for your 200 000 home because you got 160 000 mortgage now between 2010 and 2020 you're paying 840 a month every month on your mortgage and then in 2020 a few things happen you get hit with this pandemic and your property value goes up from 200 000 let me get my blue marker actually to three hundred thousand dollars because home values have gone up over the last decade and at the same time interest rates also go down from four point eight percent to three percent i change the color of the error to make it more consistent but at this point your bank is hounding you on the phone saying hey you need to come and refinance your mortgage because you can save a ton of money now there are ways for you to save a ton of money by refinancing your mortgage but the reason why your bank is hounding you is because they don't want you to shop around and find a lower rate somewhere else i'll be talking about that in just a minute and so they want to close the deal while they can but back to this so you've been paying your mortgage for 10 years and now the money you owe isn't 160 thousand dollars this has come down to a hundred and twenty nine thousand dollars because you've been paying off some your mortgage each and every month but take a look at this before you only had forty thousand dollars worth of equity in your home now you have hundred and twenty nine thousand dollars worth of loans on a three hundred thousand dollar home which means now you have equity of do the wealth hundred and seventy one thousand dollars on your home quite a big jump from forty thousand dollars back in 2010. now with interest rates at three percent you want to know what your options are for refinancing and you want to know how much money you can save when you refinance your home here's what happens when you bought this home back in 2010 you got money from lender one they gave you money and then you are paying lender one your monthly 840 when you refinance your home you are going to lender two and lender two is going to now give you money and at the exact same time as they give you money you are gonna pay off lender once now lender one goes away and now you're gonna start paying lender two instead of lender one because lender two is letting you borrow money cheaper than lender one at the time when we're recording this video there are essentially three different ways that you can refinance your mortgage i'm gonna go through each one that way you can see how you can save money using each different approach so take a look at this i'm gonna clean this off that way we can go over the three different ways that you can refinance your loan option one is you take out a brand new loan for a hundred and twenty nine thousand dollars because remember you took out a hundred and sixty thousand dollar loan and now in 2020 you only owe 129 000 so you take out a brand new 129 000 loan at three percent interest and now your monthly payment is going to drop from eight hundred and forty dollars a month to 545 dollars a month so you're saving a few hundred dollars each and every month but now you're going to be on the hook for this new loan for 30 years option two is you still take out only a hundred and twenty nine thousand dollars so this is just enough for you to pay off lender one and now you're gonna start paying lender two you're gonna take out this 129 000 at three percent interest and now lender two is going to say okay pay us 545 dollars a month but this time you're gonna say okay i'll pay you 545 a month plus some extra instead of paying 545 now you're gonna pay 840 a month even though your minimum payment is 545 which is the same amount of money as you were paying before now with option two you're not saving any money monthly because you're paying the same amount of money as you did before you refinanced but if you follow this plan you are going to be mortgage free in 16 years so you are going to be mortgage-free in the year 2036. if you just continued following this plan you would be mortgage-free in 30 years which is 2040. so you're going to be mortgage free four years sooner than if you didn't refinance and if you go down this plan you're going to be mortgage free in 2050. so if you go down option two you're going to be mortgage free years sooner than option one and option two which means that's the years of saving eight hundred and forty dollars a month that's tens of thousands of dollars of savings by not having to pay mortgages for years option three is a little bit different so now you have this home that you bought for two hundred thousand dollars that is now worth three hundred thousand and you only owe a hundred and twenty nine thousand dollars so this is how much you owe and this is fair market value so you have this 300 000 home that you only owe 129 000 on and now option three you say hmm why don't i take out 80 of how much this home is worth so now option three you're going to take out 240 000 when you get this 240 000 you're going to pay off lender 1 so you're going to give them the 129 000 that you owe and then you're going to have an additional 111 000 in your pocket now in option three your minimum payment is gonna jump up from eight hundred and forty dollars a month to one thousand and ten dollars a month and you're gonna have to continue making this payment for the next 30 years so that will be until 2050 but now you have an extra hundred and eleven thousand dollars that you can use today if you plan on using option three because you wanna go on a nice vacation you wanna go shopping or maybe you wanna buy a brand new car then you my friend are on a straight line path too let me show you broke this option three right here should only be used if you have a good use for your money and when i say good use for your money i mean like an investment opportunity or a business opportunity where you can almost certainly guarantee that you're gonna get at least a three percent return on your money because if you can do that then the money you're gonna make from your investment or your business is gonna make you enough money to pay off the interest on this loan and put some more money in your pocket if you don't have an opportunity like that stay away from option three this option comes with the most risk the reason your bank has been hounding you to do one of these three refinance options is because some lenders charge lower interest rates than others and if your bank can lock you in then you don't have the opportunity to shop around the simplest thing that you can do to save money save time and shop around to find great rates is by using a mortgage comparison tool and the following is an advertisement from our sponsor credible who operates a mortgage comparison website at credible you can check pre-qualified mortgage and refinance rates and no cost to you because they have multiple lenders competing for your business on their marketplace so you can compare great rates and pick the best loan option that's best for you it's simple you just got to go onto their website and enter in a few pieces of information which just takes a few minutes and the credible will present you with actual pre-qualified rates from different lenders that way you can compare credibles pre-qualification process is easy to use and checking the pre-qualified rates does not affect your credit score so if you want to learn more and see what mortgage rates you might qualify for i got the link to where you can do that with credible in the description credible does pay minority mindset and advertising fee when you submit a pre-qualification request but there's no additional cost to you credible operations inc mls number 1681276 is not available in all states so if you want to learn more i got the link to where you can do that in the description below the way this new refinance fee or tax works that i talked about in the beginning of this video is that the federal housing finance agency will charge all lenders a one-time half a percent fee if your refinance loan is backed by fannie mae or freddie mac let me show you what's going on that way you can better understand how to avoid paying any unnecessary fees so let's say lender a gives you a 100 000 loan so this money is going out and then bunty goes to lender a and bunty says okay i want a hundred thousand dollars too so now another hundred thousand dollars goes out from lender a and then nancy goes to lender a and she says you know i want a hundred thousand dollar loan too so now a hundred thousand dollars goes from lender a to nancy so lender a has all this money going out they have money going to you bunty and nancy and if lender a has to wait for you bundy and nancy to make the monthly payments on their loans before they have more money to issue new loans eventually lender a is gonna run out of money because they have way more money going out than they have money coming back in because they're gonna give you a hundred thousand dollars today and they have to wait 30 years to get their money back that's where fannie mae and freddie mac will come into play because they will buy these loans from lender a that way lender a has money to issue more loans so lender a is going to give you all this money and then fanny man freddie mac are going to come to lender a and say okay we will give you money you give us these paper loans you can't go directly to fannie mae and freddie mac and borrow money you got to go to this lender but the lender is going to get money from fannie mae and freddie mac that way they can continue to make more loans what's going to happen starting december 1st 2020 unless it gets pushed again but what's scheduled to happen on december 1st is if you get a refinance loan through lender a lender a is going to give this loan to fannie mae and freddie mac in exchange for money but then starting december 1st fannie mae and freddie mac are going to start charging your lender an additional one-time half a percent fee that means if your bank is giving you a loan they're going to have to pay this additional fee to fannie mae and freddie mac in order to sell their loan to them that way they can issue more loans you might think wow that sucks for lender a because now they have to pay this additional fee to do this refinancing but you have to understand this lender a has to keep a certain amount of margin or profit to stay in business which means if lender a has to pay an additional fee there's a very good chance that this fee is going to get moved along here that way you have to pay an additional fee to refinance because lender a has higher costs now i don't know this for sure yet but there's a very good chance that some lenders are going to eat up this entire cost to maintain their business and other lenders are going to push this entire cost to you while some lenders are going to be a hybrid they're going to eat up some of the cost and make you pay the additional fee which is why it's so important to use a mortgage comparison tool especially if you plan on refinancing after december 1st because you want to know how much you're going to have to pay in fees in order to refinance your mortgage to put it in perspective if you're refinancing two hundred thousand dollars that means your lender is gonna have to pay an additional half a percent fee on two thousand dollars which is a one-time one thousand dollar fee which you might have to eat up a portion of so this fee isn't really a deal breaker when it comes to refinancing but why pay this additional fee if you don't have to that's why if you are interested in refinancing your mortgage it's better to do it sooner rather than later because if you can refinance your mortgage before december 1st you can avoid paying this fee altogether and you also want to again make sure you're shopping around that way you can make sure you're getting the best deal possible and paying the lowest fees possible but before you do anything you want to make sure you understand what your goal is with your refinance so remember those three options that i gave you earlier that way you can make sure you're doing something that's going to help your financial situation thank you for watching if you enjoyed this video share with one friend that way we can help spread the word if you want to understand what's really going on with interest rates and why they've been crashing so much i already made a video on this and you can watch this video on youtube by clicking this button right over here thank you for watching and as always keep hustling

Channel: Minority Mindset

Views: 239,806

Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, get money smart, refinance home mortgage, refinance home mortgage 2020, refinance home mortgage cash out, mortgage refinance, mortgage refinance tips, mortgage refinance 2020, refinancing your mortgage, how to refinance a house, home refinancing, home refinance 2020, home mortgage, refinance, home mortgage refinance, credible, credible refinance

Id: jHqBtKeCjtw

Length: 13min 39sec (819 seconds)

Published: Mon Oct 12 2020