If you own a home you already know the benefit of getting a yearly credit against the interest. But, if you’ve owned it for more than 12 to 15 years your deductible interest is no longer offsetting your taxes. There are many ways to make having a mortgage work for you. To discover all the options available, contact a company like Flagship Financial Group to assist with the process.
Most people focus on paying their monthly mortgage payment without giving a thought to how much equity they have in their home. Many even try to add a little extra to pay the debt off earlier than their loan term. While it’s good to keep your debt-to-income ratio in check, it’s also smart to use your investment to your advantage. Think of your home as a savings account. You build equity and borrow against it to pay for things without taking on more debt. It’s a win across the board. You can use the money to renovate, pay for school tuition or to pay off debt. By refinancing, you’ll get a low-interest rate versus a credit card. Plus, you won’t take money out of your savings and you’ll get to deduct the interest on your taxes.
There are many other reasons why refinancing to fund your investment is a good idea. If you’ve always wanted to invest in real estate but never had enough to cover the down payment requirements refinancing your home might be your best option. You can use the equity to reinvest and earn extra income. Since it’s an investment property, lenders will take into consideration the yearly rental income you will make on the property and add that amount to your net income.
If you currently have a fixed rate mortgage and you are looking to lower your monthly costs, you can refinance using an ARM (adjustable rate mortgage). This type of loan gives you a lower monthly premium for the first few years. It can help anyone who is at the top end of their budget reduce costs and get back on track. When the rates change and your payment increases you can always refinance again.
If you are an active or retired member of the military, refinancing using a VA loan can give you a lower monthly payment without the need for a down payment. Since the loan carries a guarantee for payment from the U.S. Government the approval rate is much higher. You don’t need a high credit score and the closing costs are minimal compared to a conventional mortgage. Also, unlike all other loans, there is no P.M.I. insurance added, saving you thousands over the term of the loan. Use social media resources, like the Flagship Financial Facebook page, to review your options.
Owning a home can also help you save for retirement. If you suffer a hardship and need extra cash, instead of reaching out for your pension or 401K, use the equity in your home. You should never borrow against your retirement accounts. The first reason is obvious; it’s for your retirement. Secondly, when you do, the penalties are stiff. You’ll pay 20-30 percent off the top before you get the money. And then when you report it on your taxes you can expect to pay at least another 10 percent. By the time you’re done you’ve spent almost half the money on absolutely nothing.
Whether you are looking to lower your monthly payments, invest in property, renovate or pay off debt, using your home can have lasting benefits. It allows you to have a lower interest rate versus using credit cards or personal loans.