Refinance, Debt Consolation, Debt Cancelation
Reduced DEBT INCREASE WEALTH DOT BUZZ SPROUT DOT COM. Welcome and Mr Chuck here this week. We're going to talk about refinancing that mortgage loan consolidations and debt cancellation services. What she should do what you should avoid but before we get started with that we need to remember what our plan is. He want to reduce your debt as quickly as possible with the least amount of expense or cost so at that said should you refinance your mortgage or not. But I I want to remind you to stay true dear plant and the plan is keeping track of all your finances know how much is in your checking account and if you have any extra money or discretionary money. Transfer that to your savings account. If you're not doing that you're in trouble and by now. You should've called and renegotiate some of terms what you've been paying for maybe cell phone cable. Internet streaming. You need to find better prices for the things that you use on a regular basis. If you're not using things you need to cancel the services or you'll never get out of debt. Were trying to reduce your spending so we can apply that money to your debt now. Should you refinance out mortgage? I would say years ago and interest rates were twelve percent eight percent six percent definitely if the interest rate dropped two percent one percent at least one half percent and you can avoid some of the closing costs or if he Got Closing costs. Wave definitely do it. But you must avoid run in your credit card debt and then increasing them out yo on your mortgage your credit card. Debt is unsecured debt feed default on that credit card. They're working they're gonNA do is cancel that card service. Maybe turn it over to collection and try to get some money out. Yeah but they have nothing as collateral that they can force you to or they can foreclose on so with that said if you something happens and you can't afford to pay your mortgage. He wanted to try to keep your mortgage payment as low as possible. Also if you've been in your house for five or six years he wanna try to get a terms. The length of the mortgage shorten down fee. Started out was a thirty year mortgage. You've been there for years. You want to try to get a twenty five year mortgage refinance. A lesser amount at that in itself will help reduce that monthly payment. So that's my thoughts on that. Remember the plan. You want to reduce the debt as fast as possible if you keep increasing your mortgage and keep on a thirty year mortgage. How's that reducing the debt and? How's that getting house again now? Debt faster so as that thought. I have an article. Thong Una read about refinancing. And you've probably been wondering why keep reading these articles on the main reason is it gives me some credibility it gives me some backup of what. I'm you know what I'm talking about. So with that sad. Here we go. I have a sponsor to try to offset some the cost of this podcast. So That's act talk about next if you take vitamins. He should be taken isotope tonic liquid. It's a- gives you rapid absorption. It's fairly easy to swallow. E get highly concentrated nutrients when which gives you the maximum benefits. It's much better than the pill vitamin because it gets into your system at a much faster rate and more of the vitamin gets into your body. Where your body can use it. I've been using it for five years now. I highly recommended it Learn more about Isis tonic. Vitamins go to my website. Reduced DEBT INCREASE WEALTH DOT BUDS SPROUT DOT COM upper. Right hand corner. Click on the heart. And I'll take you to an ice at tonic website which belongs to my wife and help support to show. Thank you very much how to know when to refinance your mortgage from bank rate written by libby wells when mortgage rates fall as I have in the first quarter of twenty twenty many homeowners refinance their loans. Refinance activity is up dramatically over the last year. It doesn't mean it's always a smart move knowing win to refinance. Your mortgage is the trick. Generally if refinancing will save you money help build equity and pay off your mortgage faster. It's a good decision and with rates this low even people have fairly new mortgages may be able to benefit from refinancing when it's a good idea to refinance your mortgage if you can shave one half to three quarters of a percentage point off your mortgage right by refinancing e should look into it says. Greg McBride. Cfa CHIEF FINANCIAL ANALYST FOR BANK RATE. Just be sure. The cumulative savings on monthly payments is enough to offset the cost of refinancing. If you're planning on moving in the next year or two. It may not mortgage. Interest rates are determined by market factors including the yields on long-term treasury bonds and of course the best rates and terms. Go to those with the best credit so the question of went to refinance is not just about interest rate. It's about your credit being good enough to qualify for the right refinance. Loan your financial goals. How long do you plan to stay in your home? How much equity you have in the home and your overall financial conditions are important consideration when it comes to refinancing. Ask yourself the right questions to help you. Get started is refinancing worth it. And how does refinancing work? There are a variety of ways to refinance your mortgage finding the right. Loan depends on your goals. You might want to switch from an adjustable rate mortgage to a fixed rate loan. That has a steady monthly payment. Or You may want to shorten attorney alone from thirty years to fifteen years to save yourself a bundle in interest charges. I refi is also a way to get rid of private mortgage insurance at your reach twenty percent equity in your home. Most homeowners offer a straight rate and term refinance that lowers their interest rates and give them a comfortable repayment term. Some customers went to lower monthly payments to free up money for other expenses such as college tuition or auto loan. How much cast out mortgage refinance other Hamas go with cash-out refinance in which they borrow more than they owe on the home and use the cash to retire. Credit Card debt pay for home renovation and other major expenses wiping out credit card bounces with lower interest. Loan can be a good move but if you start racking up card balances again you're setting yourself back and increasing your risk. Your mortgage is a debt secured by your home if you start missing mortgage payments. You COULD LOSE. Your home to foreclosure are barrels. Should consult with a mortgage professional to determine if their financial needs are best suited for cash-out refinance versus other forms of credit says Richard Loo a mortgage consultant for C. to Financial Corp as San Diego based mortgage broker. How long does it take to recoup the cost of refinancing? The interest rate is not the only cost away when you consider whether refinancing is worth it. There are cost to close a refi loan and they can be steep. Expect closing costs to total two percent to five percent of the principal amount of the loan. If you borrow two hundred thousand and closing costs are three percent that you'd be owing six thousand dollars at closing rather than require all that money upfront. Many lenders let you roll the closing costs into your principal. Bounce and finance analyst part of the loan decide whether refinance makes sense calculate. How long does it take for the cost of the mortgage refinance to pay for itself? If you're planning to sell the house before you break even refinancing might not be worth it if our borrowers refinancing. Strictly to lower monthly mortgage payments and closing costs are twenty four hundred dollars. That borrows are expected to say. At least this amount and interest payments for the duration they plan to have the loan says Lou to determine your break even point divided total closing costs but amount you say each month with your new payment how to calculate your break even point for closing costs. Let's say your new mortgage saves you one hundred ninety two a month and cost closing costs. Three Thousand Dollars. Three thousand divided by one hundred ninety two a month in savings fifteen point six months to break even if you plan to sell the house before your break even refinancing is not a good strategy example of mortgage refinance. Let's say you took out a thirty year mortgage for one hundred and fifty thousand fixed rate of six percent. Your monthly payment is eight hundred nine hundred dollars over the life of the loan. You'll pay three hundred twenty three thousand seven hundred fifty five dollars including one hundred and seventy three dollars. Seven hundred and fifty five dollars in interest five years into the loan. You pay ten thousand four hundred eighteen dollars towards the principal and forty three thousand five hundred forty one and interest now you want to refine nights the remaining one hundred and thirty nine thousand five hundred eighty one dollars of your principal balance with a new thirty year fixed rate loan of four point five percent. Use Them Bank rates Mogi mortgage refinance calculator. You can figure out whether this would be a money saving. Move your new loan were slash your monthly mortgage payment by one hundred ninety two dollars to seven seven life alone. You'll pay two hundred fifty four thousand six hundred and five dollars which one hundred fifteen thousand twenty four dollars would be interest at in fifty three thousand nine fifty nine and principal and interest. You paid in the five years on the previous mortgage and your total cost would be three hundred eight thousand five hundred sixty four including one hundred and fifty eight five sixty five in interest by refinancing and not only lower your monthly payment significantly long-term savings of fifteen thousand one hundred ninety dollars in interest. How long does it take to refinance a mortgage at time it takes? The refinance depends on your lender as well as how long it takes to complete inspections appraisals credit checks and other requirements but the Internet has generally simplified the process. Many lenders websites allow you to read about different loan. Products COMPARE INTEREST RATES. Fill out loan applications and submit documents within the past few years. Technology has streamline the mortgage process tremendously says Lou the online applications mobile document scanning APPS and easing it's yours borrow can perform most tasks was out printing a single document. Most refinances can be closed within thirty days. Us Bank rates mortgage calculator to compare your own loan scenarios. See what happens. When you input different mortgage terms in years or months reveal the amortization schedules see how much total interest you would pay. Good credit can save you a lot of money on your mortgage again from bank rate DOT com. This article had made some very good points. First of all is the type of mortgage. Are you currently have? Do you have a variable rate mortgage where the interest rate is adjusted up or down depending on what the interest rate is doing from the feds. If that's the case I highly recommend trying to lock in a fixed rate mortgage. The rates are low now so you never know. Maybe they're not going to go up for two or three years but fi in the next five to twenty five years are definitely could go up. Remember when I got my first mortgage it was twelve. And a quarter percent they been on the downhill slide. Ever since that. That's GonNa Change. It's just a matter of time. If you have a balloon mortgage well I would refinance at as soon as possible because in five years is a short period of time. Then you have to refinance it again. It's a good time now. So why not get it done? Also if you have more equity in your house if the value of your house has gone up you got at least twenty percent or more equity in the house if you refinance you'll get out a pan of principle mortgage insurance and that could save you some money. Maybe hundred hundred fifty dollars a month that could go towards the principal or maybe into your pocket. So yeah so there's some good things remember. Look around. Tried to find a lender. That's not gonNA charge you a whole lot of money to refinance. Because they're going to roll that in and increase your debt and that's what you're trying to avoid. The last time I refinance was with the bank that I had my checking and savings account with there was no closing costs at all. It was quick and easy and I got it down a ten year loan with five hundred dollars a month payment so I've been paying on that for a while and I got my balanced down so that really helped out a lot the now let's talk about debt consolidation and. I don't mean by refinancing your home and rolling all your credit card debt in there. Because that's you just setting yourself up for trouble because now you got credit cards that are paid off and unless the mortgage company required you to close those credit cards those cards if they're still open you're to start using them and you can just get right back in the same problems you were before so I highly discourage you from role on your credit card debt into your mortgage as I said before. You don't want your house. As collateral for unsecured debt debt consolidation. If you don't know what that is you're taking out a new loan to pay off old loans and a lot of people do that. The pay off a bunch of high interest rate credit cards and they may get a five year or ten year loan. Maybe through their local bank at a lower rate may be at five or six percent similar to what a car loan would be and that works great a lot of times when they do that though might require you to close down some of those credit cards. Pay Him off and they'll close them down for you. And the long term it could help your credit rating but in a short. Turn your credit ratings. GonNa take a hit and you're going to have less credit cards to us so you're GONNA be forced more into Paying cash and your checks and using your checking account and not going staying within your budget us Cra- guess what I'm trying to get out of there. He it's been a force you to quit live and on those credit cards. Remember Your Plan. Quit creating new debt and by role at over. Maybe you're creating a new debt. But maybe getting rid of four or five old debt could be a good thing. I tried to avoid that. I never done that I never. I never got a term loan and to pay off credit cards. But what I've done in the past is when I got a credit card. Pay Down the zero and they sent me some literature in the mail saying Oh eighteen months interest free no interest for eighteen months no interest for twelve months. It's a balance transfer and credit card or offer. If you have a credit card was zero balance they may off you bounce? Transfer with twelve months or eighteen months no interest but they're going to charge you three percent some charges five percent. I use that and it works great and you can really reduce the amount of interest your pan so if you reduce the amount of interest your pan he got to look at a Kfi transfer two thousand dollars. I pay five percent. It's GonNa cost me. I don't have the math in my head right. This minute is GonNa cost you one hundred dollars. How long is GonNa take you in interest savings to pay that off? I think I figured it out. It was like one and a half months So I want head and I did it. Now you gotta remember if you go past that twelve months grace period or the eighteen months with no interest. They're going to nail you. They're gonNA attack on a whole bunch interest and you want to avoid that only transfer credit card balances to that card for the N. Amount that you can pay off and that time period that they're giving you that grace period say it's a year transfer three thousand dollars over. Make your payments get paid down to zero in the year and Lo and behold you know what they're going to do they're going to send you that same offer again and you can do it again. So that was set a big tip. That's what I use. There's I heard other people other financial experts saying don't do that. It's not a good deal but remember look at what you're paying in interest charging thirty six thirty six percent interest. You're paying a lot in interest if you can get a part of that balance over to know entrace and you can pay it off in that same amount of time that they're giving you then. Why not do it? I did at work good at helped reduce my interest. What happens when you reduce your interest? You pay less you pay less interest you apply more to your balance your principal. So you're GONNA pay more or less interest. It's a snowball effect again. I want to state that. So that's all I have really about. Loan consolidations Than loan cancellation companies. I've never done it. I stay away from them. It's a bad deal they're gonNA charge you. A percentage and on attorney's GONNA file bankruptcy. He's GonNa Force you he's GonNa ask you to pay him before he filed bankruptcy. So I I never did. Bankruptcy never did loan debt cancellation and they make it sound great. But they're going to charge you money. They don't they're not working for free and a debt cancellation companies going to charge you. Fifteen to twenty percent a wet. Yo and then they're gonNA make they want you to pay them I and they're gonNA take their fees first and then I don't know I don't know what happens. But they don't pay those bills and they're gonNA harass you and you got creditors gone. Yeah I don't know if all that's GonNa work out too good that you know fifteen to twenty percent is pretty hill healthy an amount of money especially if you owe twenty thousand dollars. That's like four thousand dollars and that's four thousand dollars. You could use to apply to your to your balance your principal amount and they reduce your that down so with that said. I have an coming up. That's going to talk about Loan consolidation is GONNA explain. It is going to talk about debt cancellation companies and why you should not use them. Truth About debt consolidation Daveramsey DOT COM getting out of debt. The truth about that. Console your deep it. You're in deep with credit cards student. Loan payments and Carlos. Minimum monthly payments are doing the trick. Help next your debt. And your flippant scared. Something has to change. And you're considering debt consolidation because the lower one easy payment and a promise of lower interest. Rates debt sucks but the truth in debt consolidation loans and debt settlement companies suck. Even more they don't help you slay mammoth amount of debt. In fact you end up paying more in staying in debt longer because of so-called consolidation. Get the facts before you consolidate your debt or work with a settlement company. Here are the top things you need to know before you consolidate your debt. Debt consolidation is a refinance loan with extended repayment terms extended repayment terms. Means you're be in debt longer. Lower interest rate isn't always a guarantee when you consolidate debt consolidation doesn't mean debt elimination debt consolidation is different from debt settlement. Both can skim you out. Thousands of dollars what is debt consolidation debt? Consolidation is a combination of several unsecured debts. Payday loans credit cards medical bills into one monthly bill with illusion of a lower interest rate lower monthly payment and simplified debt relief plan. Here's the deal. Debt consolidation promises. One thing but delivers another. That's why the dishonest companies to promote too good to be true debt. Relief programs continued to rank as the top consumer complaint received by the Federal Trade Commission. Here's why should skip debt consolidation an opt? Instead to fall a plan to help she actually win with money. When you consolidate. There's no guarantee you're inches. Rate will be lower the debt consolidation. Loan enter trait is usually set at discretion of the lender or creditor and depends on your past payment behavior in credit score. If you qualify for a loan with low interest note guarantee the rate will stay low. But let's be honest. Your interest rate isn't the main problem. Your spending habits are the problem. Lower interest rates on debt consolidation consolidation loans can change just specifically apply to consolidate debt through credit card balance transfers day enticingly low interest rate is usually an introductory promotion and applies for certain periods of time. Only their rate will eventually go up beyond guard for Special. Low interest deals before or after the holidays. Some companies no holiday shoppers. Who Don't stick to a budget tend to overspend in panic when the bills start coming in and other loan companies were hook you with low interest rates then inflate to interest rate over time leaving you with more debt consolidating. A bills means you'll be in debt longer and almost every case you'll have payments because the term me alone is prolonged extended terms mean. Extend the payments. No thanks. Your goals should get out of debt as fast as you can. Debt consolidation. Loan doesn't mean debt elimination. You're only restructuring. Your debt not eliminating. It you don't need debt resume rage. -Ment you need debt ree F formation. Your behavior is money doesn't change most of the time after sunlen consolidates their debt to Gret debt. Grows back why they don't have a game plan him to pay cash and spend less in other words they haven't instead. I believe good money habits for staying out of debt and building. Wealth behavior hasn't changed so extremely likely that go right back into debt. How does debt consolidation really work? Let's say you have thirty thousand and unsecured debt think credit cards loan car loans and medical bills. The debt includes a two year loan for ten thousand dollars at twelve percent and a four year. Loan for twenty thousand dollars at ten percent. Your monthly payment. A first loan is five hundred seventeen dollars while the second of the payment on the second is five hundred eighty three. That's a total payment of eleven hundred dollars a month. If you make monthly payments on them you'll be out a debt and forty one months and have paid a total of three thirty four thousand eight hundred twenty one dollars consulting company that promised her lawyer payment to six hundred and forty dollars per month and your interest rate is nine percent by negotiating with your creditors enrolling. The two loans into one sounds great. Doesn't it who wouldn't want to pay four and sixty dollars less per month and payments but? Here's the downside. It will now take you fifty eight months to pay off the loan and now the total loan would jump to thirty seven thousand one hundred and three dollars so that means you shout at out. Twenty two eighty two more to pay off the new loan even with the lower interest rate of nine percent. This major lower payment has caused thousands. More two words for you ripped off credit card debt eating your lunch. What's the difference between debt consolidation and debt settlement? There's a huge difference between debt consolidation and debt settlement. Although often at terms are used interchangeably. Pay attention here because these crafty companies will stick it to you. If you're not careful we've already covered consolidation. That's a type of loan that role several unsecured debts and to one single bill debt settlement is different debt. Settlement means you hire company to negotiate a lump sum payment with your creditors for less than what you owe. Debt settlement companies have a charge of fee for their services often the fees anywhere from fifteen to twenty percent of your debt. Think about it this way. If you owe fifty thousand you're settled on fees run range from seventy five hundred ten thousand so basically you're debt would go from fifty thousand to fifty seven thousand or sixty thousand. That's not bad enough fraudulent debt. Settlement companies often tell customers to stop making payments on their debt and instead paid the company wants their fee is accounted for. They promised to negotiate with creditors and settle. Your debts. Sounds great right well. The debt settlement company usually doesn't deliver on helping you with your debt until after they take your money they leave you on the hook for late fees and additional interest payments on debt. They promised to help you pay that. Settlement is a scam and debt relief. Company that charges you before the actually settle reduce. Your debt is in violation of the Federal Trade Commission avoid debt settlement companies at all costs the fastest way to get out that when you consolidate debt or the debt settlement company. You only treat the symptoms of your money problems and never get to the core why you had issue issues in the first place. You don't need to consolidate your bills. You need to pay them off to do that. You had to change the way you view debt. Dave says personal finances eighty percent behavior and only twenty percent head knowledge. Even though your choices landed you and Apollo debt. He had the power to work your way out. You just need the right plan. The solution isn't a quick fix and it won't come in the form of better interest rate another loan or debt settlement. This solution requires. Roll up your sleeves and make a plan. And that's from Dave Ramsey dot com. My thoughts are if you have an unpaid credit card. A credit card with a zero balance and that credit card is offering you balanced transfer were throwing charge at three percent or less than I'd take advantage of it if they're gonNA give you a year to eighteen months to pay for it and I'm assuming that you got your spending under control and you're not GonNa go wild and you've got to be able to pay that off in that time period where the interest rates are still zero and remember go back and look at how much interest you going to save and how long it's GonNa take you the pay that that balance transfer fee off by paying less than interests new episodes are released weekly subscribed so he can follow. Mr Chuck's journey to reduce debt and financial freedom. As you do the same if you liked his podcast please share.