Most of us dream of having our own businesses and living the dreams of our lives only to be halted by fears that we do not have enough money to turn them into reality. This is a very common scenario for ordinary people who work day in and day out. They try to save some money in the bank and hope later on that their savings will be enough for when they get older. So how do we effectively eliminate this fear of refinancing?

Information is the Key

Information is the Key to Refinancing

“Knowledge is Power.” How many times have we seen and heard this phrase? Countless times actually. When we’re lost and don’t know where to turn, utter the phrase and that will instantly bring you back to focus. Knowledge by definition means, “facts, information, and skills acquired by a person through experience or education; the theoretical or practical understanding of a subject.”

Our ability to take on everyday challenges lies from how much we know. The more informed and educated we are, the more power it gives us to deal with a certain situation. And as mentioned above, one challenge that’s always encountered very commonly these days is the fear of not having enough money left over after the mortgage is paid. If that’s already a problem in your daily life, then imagine how much trouble it would be when thinking about financing a home.

Buying a home and not having the right information with you at the onset could come back to hurt you later if your budget is overextended. Information as to how much it will cost to renovate the house upon purchase, the monthly association fees that come with some homes, the applicable taxes to pay and the ongoing mortgage interest cost — these are issues any home buyer would need to anticipate.

What Are the Financial Options for Home Buyers?

Refinancing and Financing Options for Home Buyers

When we enter into any kind of endeavor, money is always one of the top concerns we need to address is. If you’re financially prepared, that’s absolutely so much better. But what if you’re not, and you already have enough debt on your plate eating away every penny of your income? We can use the many online rent vs. buyer calculators, or, we can simply talk to a Financial Advisor or lender who can layout all possibilities that we can choose from. And almost always instantly, they tell you that one of the ways to buy a house with minimal cash outlay is through careful financial planning.

What if you are considering whether it is a good idea to sell and then buy? Staying put and refinancing your current mortgage may be better than the hassle of changing homes. Refinancing is taking a new loan and replacing an existing one, ideally with better terms and lower interest rates.

Reasons Why Buyers Avoid Refinancing

If that is the case, why do most of us fear or avoid refinancing? Guest host Del mentioned, that most think they need to lower their interest rate by 1%. He debunked this by saying this was true about some time 30 years ago, but nowadays not so. In summary of this podcast discussion, here are a few other reasons why most would avoid or delay refinancing:

  • It will hurt my credit score – While this is a valid point, the amount of savings from refinancing outweighs the impact on the credit score’s slight dip. As long as we pay off the loan and establish a strong payment history, the credit score will also improve over time.
  • I don’t qualify – Before we think that we don’t, let’s check what refinancing requires us to do because according to an online source, “You can refinance with an FHA loan even if you have little or no equity in your home, a damaged credit score or higher debt than lenders usually accept.” Now that’s something to think about.
  • I need to wait for rates to drop. Yes, this could really be of help especially if we know that a drop-in rate could already save much money, especially if you’re looking at a fixed rate calculation for 30 years. So yes, we should not be in a rush. Timing is everything. There are reports of a huge drop in mortgage rate recently. Would this be the right time for you to do refinancing? Yet no one can predict the future, so it is best to calculate your unique situation with the rates that are available today.
  • It takes a lot of work – Understandable. That coupled with the fear of not being qualified can get you stuck and decide to drop on your plans. Get a capable Buyer Agent to assist you to get all the needed information. They will generally do this for free in the hopes that you may decide to work with them to get a new house. Simply visit the Buyer Agent Search site and we can get you one of our best agents to check and guide you all the way. Market information is integral to their position so their expertise should come in handy. Financing or refinancing is one of the most common worries of home buyers. Again, buying a home should not be stressful especially with the right Buyer Agent beside you to help you do the hard work and negotiate on your behalf, and help you figure out the dollars involved for staying put or moving.
  • I don’t know how it works – Most of the time, this really is the culprit. Either we know too much or we know too little, both can be a problem. Refinancing may not be for everyone, but it is definitely something worth looking into. Just knowing how it works can already get you a step ahead of your plans, be it for refinancing your current real estate property and making it into a rental property, or financing a new home purchase.

Again, how much you know dictates the power you have over that decision. This is exactly what the hosts Barry and Larry are talking about when they say- information is money.

Listen to the full broadcast of the show here:

What are the Benefits of Refinancing?

What are the Benefits of Refinancing?

Here are some of the benefits of refinancing:

  1. You can save money. With the right information, you can save yourself from overspending. It really doesn’t hurt to ask a reputable lender to shop for a loan that gives you a better rate.
  2. You can have more money for other things. Ideally, refinancing should offer better terms, including a lower interest rate. Paying a lower rate would mean, freeing up some cash for other expenses you may have at home.
  3. You can opt to shorten or extend the loan term. Depending on your financial capability, you may choose to refinance for a lower monthly mortgage payment by extending the loan term or you may choose to own the home faster by shortening the loan term

Are You Still Afraid of Refinancing?

If you can spare 3 hours of your time, the hosts of a Bootcamp on September 21st will address any concerns you have with regards to buying a home or refinancing. They will equip you with the right information, so you do not lose money in the process of buying a home. As Barry says, “The more information you have, the more chances of earning/saving more money.”

If you like that idea altogether, you may call 800-383-7188 or visit this page in the Buyer Agent Search site for FREE registration to join the Bootcamp. It will be from 9:30 am to 12:30 pm. In Denver, CO. Don’t miss it!

Kathleen Chiras is the associations manager and web manager for the Colorado Exlusive Buyer Agents Association.